How Did Avon Products Perform in Its 4Q15 and 2015 Results?



Price movement of Avon Products

Avon Products (AVP) fell by 1.9% to close at $3.17 per share at the end of the second week of February 2016. The price movement on a weekly, monthly, and year-to-date (or YTD) basis was -1.9%, 26.3%, and -21.7%, respectively.

At times, the stock has broken the support of all moving day averages. Currently, AVP is trading 9.0% above its 20-day moving average, 7.9% below its 50-day moving average, and 31.7% below its 200-day moving average.

The Oppenheimer Mid-Cap Revenue ETF (RWK) invests 0.75% of its holdings in Avon. The ETF tracks a revenue-weighted index of the S&P Mid Cap 400 Index. The YTD price movement of RWK was -12.1% as of February 11, 2016.

The iShares Morningstar Small Value ETF (JKL) invests 0.39% of its holdings in Avon. The ETF tracks a market-cap-weighted index of US small-cap value stocks. The index stocks from the 90th to 97th percentile of the market-cap spectrum, using fundamental factors.

The market cap of Avon Products’ competitors are as follows:

  • Colgate-Palmolive (CL) — $58.9 billion
  • Estée Lauder Companies (EL) — $32.6 billion
  • Clorox (CLX) — $16.5 billion
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Performance of Avon Products in fiscal 4Q15 and fiscal 2015

Avon Products (AVP) reported fiscal 4Q15 net sales of $1,607.3 million, a fall of 20.2% compared to net sales of $2,014.1 million in fiscal 4Q14. Sales of beauty and fashion as well as home categories fell by 20.9% and 14.4%, respectively, in fiscal 4Q15 compared to fiscal 4Q14.

Its net income and EPS (earnings per share) fell to -$333.4 million and -$0.76, respectively, in fiscal 4Q15, compared to -$330.7 million and -$0.75, respectively, in fiscal 4Q14.

Fiscal 2015 results

In fiscal 2015, Avon Products reported total revenues of $6,160.5 million, a fall of 19.4% YoY (year-over-year). It reported an operating profit of $165.0 million in fiscal 2015 compared to $434.3 million in fiscal 2014.

Its net income and EPS fell to -$1,148.9 million and -$2.60, respectively, in fiscal 2015, compared to -$388.6 million and -$0.88, respectively, in fiscal 2014.

Meanwhile, its cash and cash equivalents and inventories fell by 26.6% and 11.8%, respectively, in fiscal 2015. Its current ratio fell to 1.1x in fiscal 2015 compared to 1.4x in fiscal 2014.

In January 2016, it announced a transformation plan, which includes cost reductions and reinvests in growth. According to the plan, it expects a pretax annualized cost savings of ~$350 million after three years, with $200 million from supply chain reductions and $150 million from other cost reductions. These pretax cost savings are achieved through restructuring actions as well as other cost-saving strategies. Avon Products (AVP) plans to reinvest in growth initiatives, including media, social selling, and information technology systems.


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