For Avon, it's better late than never

September 18
2:35 AM 2015

Avon stock price has declined because it refused to go with the flow of the modern day industry where a lot of businesses make use of social media and other means to promote their products to drawing customers and generate larger revenue. 

There is a saying that nothing is permanent and change is the inevitable word that decides the prosperity in most industries today including beauty industry. It appeared that Avon Products is already too late to learn its lesson when it recently spoke about its plan of branching out its digital channel outside the U.S.  It will make its representatives sell using social media, according to Forbes.

Since 2011, Avon has been suffering from its worst state as its direct selling model loses market share to retail outlets and online shopping. A new CEO was appointed in 2011 hoping that the situation will be reversed but to no avail. 

Presently its cash position is shrinking and the company's out-of-date representative based selling model has been facing undermining. In addition, buyers are less interested in buying products via its door-to-door channel in an era when online shopping is the practice.  Over persistent 70% of its stock price decline over the last year is an indication that the cosmetics company will have a hard time recovering.

In the second quarter of 2015,, Avon's online website, showed double-digit growth, but has less than 10% of its total business.  The company tries to shift more representatives to sell through digital medium and spoke about taking more action towards the end of this year.

Avon Products, Inc. manufactures and markets beauty and related products.  Product categories include beauty and fashion and home.  The Company's segments are based on geographic operations including commercial business units all over the world with a sales operation in 62 countries and distribute its products in other 43 countries and territories.

Already Avon is talking about the selling of a portion of its business with some private equity firms including Cerberus Capital Management LP and Platinum Equity LLC, suggesting there are no buyers for the whole company.  If the deals work out, the investments could make the Avon's stock price steady.  The Company's cash has plummeted from $961 million from the end of 2014 to $ 697 million by the end of Q2 2015.

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