| NEW YORK/BOCA RATON, Fla
NEW YORK/BOCA RATON, Fla Feb 20 Avon Products
Inc hopes higher prices, a growing Hispanic market and
smaller selection of beauty products will help it reverse years
of declines in U.S. sales, top executives said on Thursday.
The company's North American sales have fallen by half since
2007, and last year, the size of its army of Avon Ladies sales
representatives, shrank 15 percent.
Yet the world's largest direct-selling cosmetics company,
part of U.S. popular culture for its "Ding Dong, Avon Calling"
advertisements, insists it can fix the business.
"That's our No. 1 priority," Avon Chief Executive Sheri
McCoy told analysts at the Consumer Analyst Group of New York
meeting in Boca Raton, Florida, where her team laid out in the
most detail yet how Avon plans to return to growth in its home
market, despite short-term risk to sales.
Avon's senior vice president for North America, Pablo Munoz,
put the growing U.S. Hispanic population at the center of the
company's plan, saying Hispanic sales representatives are
"incredibly committed" to the Avon brand.
The 10 top highest-grossest districts in the United States
out of 850 for Avon are primarily Hispanic, Munoz said at CAGNY.
So Avon is planning more marketing aimed specifically at
Hispanics and dedicating fewer resources on other districts.
Avon's North American business has been unprofitable for the
last three years and Munoz said reducing costs is paramount to
Avon reaching its goal of returning to profit in 2015.
A smaller assortment of Avon products will help lower
production and printing costs. A more focused assortment will
also help sales representatives because they will have fewer
products to learn how to demonstrate, Munoz said.
Perhaps the most delicate step for Avon is raising prices,
which Munoz said had remained largely unchanged for five years,
in part to keep with rising costs but also so more money ends up
in the pockets of sales representatives.
"It's very clear if we continue on the path we are on, that
earning opportunity will continue to be reduced," Munoz said.
While one analyst said the steps Avon is taking make sense,
he doubted they would be enough to stem the hemorrhage in North
America, which now accounts for less than 15 percent of its
"It's gotten smaller and smaller as a business for a very
long time with no end in sight," said Ali Dibadj, an analyst
with Sanford C. Bernstein & Co. "Our view about the U.S. is they
need to do something very dramatic - getting rid of it is a
Shares were down 0.3 percent to $15.05 in afternoon trading.