Financial Analysis for Avon Products
Financial Management
Spring 2010
Project: Financial Analysis for Avon Products Inc
Student: Ninoska Trejos
April 17, 2010
1. Background
1.1 Company Description
Avon Products Inc (AVP), founded by David H. McConnell, is a leading global beauty company, with $10 billion in annual revenue; it commenced operations in 1886 and incorporated in the State of New York on January 27, 1916. The company’s stocks are traded in the New York Stock Exchange (NYSE). Its products fall into three product categories: Beauty, Fashion and Home. Beauty consists of color cosmetics, fragrances, skin care and personal care. Fashion consists of fashion jewelry, watches, apparel, footwear and accessories. Avon conducts its business in the highly competitive beauty industry and competes against other consumer packaged goods (“CPG”) and direct-selling companies to create manufacture and market beauty and non-beauty-related products.
The company’s reportable segments are based on geographic operations in six regions: Latin America; North America; Central & Eastern Europe; Western Europe, Middle East & Africa; Asia Pacific; and China. They presently have sales operations in 65 countries and territories, including the U.S., and distribute its products in 40 more. Unlike most of its competitors, which sell their products through third party retail establishments (i.e. drug stores, department stores), Avon primarily sells its products to the ultimate consumer through the direct-selling channel. In this case, sales are made to the ultimate consumer principally through direct selling by approximately 6.2 million active independent Representatives. Representatives are independent contractors and not Avon’s employees. Avon products are traded in the U.S. and selected other markets; they also market their products through consumer websites (www.avon.com in the U.S.). These sites provide a purchasing opportunity to consumers who choose not to purchase through a representative.
Spring 2010
Project: Financial Analysis for Avon Products Inc
Student: Ninoska Trejos
April 17, 2010
1. Background
1.1 Company Description
Avon Products Inc (AVP), founded by David H. McConnell, is a leading global beauty company, with $10 billion in annual revenue; it commenced operations in 1886 and incorporated in the State of New York on January 27, 1916. The company’s stocks are traded in the New York Stock Exchange (NYSE). Its products fall into three product categories: Beauty, Fashion and Home. Beauty consists of color cosmetics, fragrances, skin care and personal care. Fashion consists of fashion jewelry, watches, apparel, footwear and accessories. Avon conducts its business in the highly competitive beauty industry and competes against other consumer packaged goods (“CPG”) and direct-selling companies to create manufacture and market beauty and non-beauty-related products.
The company’s reportable segments are based on geographic operations in six regions: Latin America; North America; Central & Eastern Europe; Western Europe, Middle East & Africa; Asia Pacific; and China. They presently have sales operations in 65 countries and territories, including the U.S., and distribute its products in 40 more. Unlike most of its competitors, which sell their products through third party retail establishments (i.e. drug stores, department stores), Avon primarily sells its products to the ultimate consumer through the direct-selling channel. In this case, sales are made to the ultimate consumer principally through direct selling by approximately 6.2 million active independent Representatives. Representatives are independent contractors and not Avon’s employees. Avon products are traded in the U.S. and selected other markets; they also market their products through consumer websites (www.avon.com in the U.S.). These sites provide a purchasing opportunity to consumers who choose not to purchase through a representative.
References: 1. http://www.avoncompany.com/investor/annualreport/pdf/annualreport2009.pdf 2. http://www.dailyfinance.com/quotes/avon-products-incorporated/avp/nys 3. http://secfilings.nyse.com/filing.php?doc=1&attach=ON&ipage=6853875&rid=12#toc28975_19 4. http://www.marketwatch.com/story/avon-shares-drop-amid-internal-ethics-probe-2010-04-13?siteid=aolRss 5. http://tabsefin.swlearning.com:8891/ta/?ExpressCode=tlbasic 6. http://moneycentral.msn.com/investor/invsub/results/compare.asp?Page=PriceRatios&Symbol=AVP