Higher labour costs and declining sales reported to be to blame
Avon has reported a poor Q1 set of results with an 81.6% slide in net income this year, amid constant recent speculation of whether Coty will acquire the direct seller. According to the company dealing with higher costs and declining sales have had an impact on this figure.
In Q1 Avon sold 1% fewer items and its sales force also decreased by 2%. Excluding the impact of currency, sales edged up by 1% however, helped by modest price increases. Gross margin fell 3.1 points to 60.8% of sales, affected by labour costs in markets such as Brazil, Argentina and Venezuela, along with the costs to make and promote its cosmetics in Russia.