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Company: Avon Products (AVP)
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69%
agree
49 votes

  AVP's Active Sales Reps Reduce Costs of Secondary Selling Channels and Promotes Sales

AVP's unique Active Sales Rep selling channel strategy reduces the costs of having to designate secondary re-sellers to sell its cosmetics products. In fact, customer service provided by the Sales Reps helps foster strong customer relationships that are crucial in the female personal care industry. As the only company in the industry to have only a boutique-Sales Rep sales channel, AVP has the unique advantage in terms of customer service. Sales Reps are also compensated as a margin of their sales, which has seen successful results in China, where AVP's business grew by 25% in Q3 2008 from the prior-year quarter due to a 99% increase in Active Sales Reps in Chinese stores.

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25%
agree
4 votes

  Foreign sales keeping Avon alive

76% of Avon's total sales from outside the United States, the country thas been hit the hardest during this economic downturn. From 2007 to 2008, the North American segment was the only segment to see reduced net sales. However, in all foreign segments, the company produced a positive increase in sales that more than made up for the loss in American sales.

In addition, with China now allowing Avon to use its direct-selling method of sales, the company's China segment has increased dramatically since the de-regulations in 2006. From 2006 to 2008, net sales in China rose 66%. With the Chinese economy rapidly growing, one can only expect that number to rise.

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37%
agree
8 votes

  Extensive restructuring program should cut costs

As cost savings associated with an extensive restructuring program are realized, Avon should see sequential margin expansion and improvements in its return on capital.

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20%
agree
5 votes

  Q3 2009 Revenues Fall Mainly to Strong Dollar

AVP announced that its Q3 2009 revenues were down nearly 4%, to accompany a 30% decline in net income from the previous year's quarter. However, a closer look at the numbers show that the company's net revenue were actually up 7% on a local-currency basis. Because of a strong dollar the revenue from other countries is converted into fewer US dollars, which hurts the bottom line -- this is especially important and potentially harmful because a quarter of the company's sales come from countries other than the US. The 7% increase in revenue (on a local-currency basis) was helped by the fact that the company hired 10% more workers to sell its products.

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20%
agree
5 votes

  AVP could benefit from increased penetration into the Chinese market

China represents a nearly untapped market for AVP. Yet the Chinese demand for beauty products is substantial. Even if AVP only manages a mediocre showing in China, revenues from the region could eventually dwarf existing markets. The current stock price of 20.9 (as of April-15-2009) more than reflects any negatives.

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38%
agree
13 votes

  Independent Avon Reps are unique advantage

Avon is uniquely positioned to increase the product price without much opposition as it sells its products through Independent Avon Representatives and they don't have a bargaining power as the customers of other Personal Products Manufacturer have. It doesn't mean that Avon can increase its price freely but it has the bargaining power against its customers. Moreover representatives earn the margin of the products sold by them. So when prices are increased, they also earn more on products sold. That can further reduce the opposition.

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