Is Avon Finally Set to Turn Around?

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By Trey Thoelcke Published
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Beleaguered beauty products company Avon Products Inc. (NYSE: AVP) has struggled for years to turn itself around. When Sheri McCoy was brought on as chief executive a little more than two years ago, she promised a turnaround, but so far has not been able to deliver. That may be about to change, as the company finally takes steps to move past the bribery probe that has been a black eye for Avon since 2008.

The company said Thursday that it will pay $135 million in fines and fees to settle the U.S. government investigation into whether it paid bribes in China. Some $68 million will go to the U.S. Department of Justice and $67 million to the U.S. Securities and Exchange Commission. Avon’s Chinese subsidiary will plead guilty under the Foreign Corrupt Practices Act in exchange for a three-year deferment of criminal prosecution, after which the charges may be dismissed. This preliminary resolution still needs SEC authorization and court approval.

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Under McCoy, Avon has been cutting costs, leaving unprofitable markets and streamlining its operations. That the cosmetics company still has a long way to go was evident in its first-quarter earnings report released early Thursday. The company reported a net loss of $168.3 million, or $0.38 per share, on total revenue of $2.2 billion. That compared to the year-ago net loss of $13.7 million, or $0.03 per share, and sales of $2.5 billion. Revenue declined across all regions during the period, led by a 22% drop off in North America.

Avon shares were down more than 12% Thursday mid-day, after earlier setting a new 52-week low of $13.22. The share price is about 23% lower than when McCoy took up the reins, while the S&P 500 is up more than 30% in that time. Only time will tell if Avon shares have hit bottom, and it would take some courage for bargain hunters to jump in now hoping for the long-awaited turnaround to finally materialize.

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About the Author Trey Thoelcke →

Trey has been an editor and author at 24/7 Wall St. for more than a decade, where he has published thousands of articles analyzing corporate earnings, dividend stocks, short interest, insider buying, private equity, and market trends. His comprehensive coverage spans the full spectrum of financial markets, from blue-chip stalwarts to emerging growth companies.

Beyond 24/7 Wall St., Trey has created and edited financial content for Benzinga and AOL's BloggingStocks, contributing additional hundreds of articles to the investment community. He previously oversaw the 24/7 Climate Insights site, managing editorial operations and content strategy, and currently oversees and creates content for My Investing News.

Trey's editorial expertise extends across multiple publishing environments. He served as production editor at Dearborn Financial Publishing and development editor at Kaplan, where he helped shape financial education materials. Earlier in his career, he worked as a writer-producer at SVE. His freelance editing portfolio includes work for prestigious clients such as Sage Publications, Rand McNally, the Institute for Supply Management, the American Library Association, Eggplant Literary Productions, and Spiegel.

Outside of financial journalism, Trey writes fiction and has been an active member of the writing community for years, overseeing a long-running critique group and moderating workshop sessions at regional conventions. He lives with his family in an old house in the Midwest.

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