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Company: Avon Products (AVP)
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95%
agree
62 votes

  Direct Selling Industry Has Potential For Growth In Recovering Global Economy

Citi's (C) analysis on the $28 billion direct selling industry has had 4% compound annual growth rate between 1991 and 2009. However, over the last three years due to the sluggish global economy, the number has decelerated. However, as the economy recovers and discretionary spending increases, companies will be able to hire more selling representatives and grow sales.

Over the last couple of years, Avon has been hit hard by the economic downturn. However during this time the company has been actively trying to increase its number of sales representatives (roughly 6.2 million) through its turn-around plan and advertising initiatives. When consumers start feeling the effect of a more up-beat economy and are willing to spend more money on Avon's products, Avon will be ready with its sales representatives.

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75%
agree
4 votes

  Possible Takeover Will Send Shares Higher

On October 12, 2010, a media report said that Avon Products was a potential takeover target by the French company L'Oreal. The report suggests that L'Oreal is considering a bidding of $44 per share, 33% higher than the $33 per share that AVP started the day at. A takeover at such a high premium would send shares skyrocketing.

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100%
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1 votes

  China Reverses Selling Law

In early 2011, China reversed a 1995 law that had banned the direct selling method in the country. This means great news for Avon as it can now use its traditional sales method in order to do business in China, rather than having to rely on third party merchants. The law reversal dramatically opens up the Chinese market for Avon and once the company can adapt its strategy in the country (in the fourth quarter of 2010, the company's revenue in China fell 45% as it reshuffled its strategy), the company will be able to reap large benefits.

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0%
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0 votes

  China Reverses Direct Selling Law

In early 2011, China reversed a 1995 law that had banned the direct selling method in the country. This means great news for Avon as it can now use its traditional sales method in order to do business in China, rather than having to rely on third party merchants. The law reversal dramatically opens up the Chinese market for Avon and once the company can adapt its strategy in the country (in the fourth quarter of 2010, the company's revenue in China fell 45% as it reshuffled its strategy), the company will be able to reap large benefits.

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4%
agree
23 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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4%
agree
23 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
93 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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16%
agree
31 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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11%
agree
27 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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