After years of poor financial results and scandals under former CEO Andrea Jung, new Avon Products Inc. (NYSE: AVP) chief executive Sheri McCoy promised a turnaround. After promising several more times, it is clear that she has failed. Avon’s board is left with the decision to keep McCoy or take the chance that someone with better skills can effectively replace her.
Commenting on the 2013, McCoy said:
Looking back at 2013, we made progress addressing tough legacy issues, identifying and beginning to resolve operational challenges, and rebuilding our management team. Although the second half of the year was impacted by both execution and macro-economic factors, I’m pleased that we are making headway toward our financial goals and Avon’s return to profitable growth. While much work remains to be done, we continue to make progress toward building a better, simpler and more stable business.
However, there is not a bit of evidence of the “progress.”
For the fourth quarter of 2013, total revenue fell 10% to $2.7 billion. Avon reported:
Fourth-quarter 2013’s net loss from continuing operations was $68 million, or $0.16 per diluted share, compared with a net loss from continuing operations of $36 million, or $0.08 per diluted share, in the fourth quarter of 2012.
Results for the full year were nearly as bad. Revenue was $10.0 billion, a decrease of 6%. Avon reported:
Full-year net loss from continuing operations was $1 million, or $0.01 per diluted share, compared with net income from continuing operations of $93 million, or $0.20 per diluted share, in 2012.
In arguably the world’s most important emerging consumer market — the People’s Republic — Avon’s failure has turned into a disaster:
Revenue in China was down 48%, or 50% in constant dollars, primarily due to declines in unit sales. Revenue was negatively impacted by a decline in the number of beauty boutiques as well as the Company’s continued actions intended to reduce inventory levels held by beauty boutiques.
McCoy has been on the job about two years. Over the period, Avon’s shares are down 15% while the S&P 500 has moved 40% higher. Avon’s board is out of time, and investor patience.
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