| BOCA RATON, Fla./NEW YORK
BOCA RATON, Fla./NEW YORK Feb 21 Avon Products
Inc's path to restoring its former luster will be a
series of unglamorous steps like updating computer systems,
reducing its use of paper and air freight and improving the
lighting in its stores in China.
In her most detailed comments yet about her plans, Chief
Executive Sheri McCoy on Thursday said the world's largest
cosmetics direct seller would not be shy to exit unprofitable
markets, was working on improving sales representatives'
compensation, and will keep innovating in areas where Avon is
lagging rivals, such as skin care.
"Avon has been underperforming for years, our financial
health has eroded, and unfortunately we disappointed
stakeholders," McCoy said less than five minutes into the
company's hour-long presentation at the Consumer Analyst Group
of New York meeting, or CAGNY, in Boca Raton, Florida.
McCoy has kept a low profile in her first year as CEO and
sought to first stabilize the company. Last year, she famously
told Wall Street the last thing Avon needs is another
restructuring, hinting at the failed attempts of her predecessor
Andrea Jung to fix Avon through big master plans..
Avon last week rose more than 20 percent after
fourth-quarter results showed signs the business is improving as
her first set of actions kicked in. Avon's profit and global
beauty market share have been declining for years.
But McCoy said a lot more needs to be done to reach the goal
she set out last year of achieving mid-single-digit percentage
revenue growth by 2016. In 2012, revenue fell 5 percent.
"The presentation reinforced our stance that management is
committed to making the hard decisions that are necessary for
the long-term health of the business. That said, we don't expect
things to turn around overnight," said Morningstar analyst Erin
Lash, who attended the presentation that was also webcast.
McCoy and her financial chief Kimberly Ross went over each
Avon category and market in an almost surgical manner, giving
examples of how to spur growth and simultaneously cut costs.
For example, its classic Far Away fragrance for women
generates about $200 million a year in sales, one of its biggest
hits. McCoy said she wants to tap Avon's significant research
and development abilities to make the fragrance longer lasting
and give it a higher-end aura.
In China, a market where Avon has fallen dramatically behind
rivals, Avon has put new lighting into its stores.
The company is also investing up to $200 million by 2016 to
update computer systems to make inventory management and
ordering more efficient and improve the social media tools sales
reps can use to drum up business. The company is also investing
in demand-forecasting software.
On the cost-reduction side, Ross said there were no sacred
cows, from travel expenses to using air freight to how much
paper is used.
"Everything is under review," Ross said.