AVON PRODUCTS INC.

Blaise Rice, Jeffery Yoklic, Kylie Butler, Lauren Payne, and Whitney Williams

How Avon Got Their Start..• Founder David H. McConnell• Avon started in the late 1800’s but was

originally called the California Perfume Company.

• McConnel was the first to offer women the opportunity to sell his products.

• He wanted to give women the opportunity to be their own boss.

Timeline 1886 California Perfume Company founded in New York CityFirst Avon sales representative- now known as the direct-selling methodFirst product produced called the Little Dot Perfume Set included five fragrances1896 First Catalog issued1897 First laboratory built- Suffern, NY1905 First print ads published in Good Housekeeping MagazineFirst color catalog1914 First international office opened in Montreal, Canada.1937 David H. McConnell died and David H. McConnell, Jr was named head of chairman

1939 Name changed to Avon Products, Inc1944 W. Van Alan Clark became the new company chairman1953 First television advertising launched1964 Avon listed on New York Stock Exchange1967 W. Hicklin became the company chairman1971 Profitable Jewelry line started1972 First time sales top $ 1 billion1979 Purchased Tiffany & Company1984Sold Tiffany & Company1986 Avon celebrates its centennial1989 First major cosmetics manufacturer to announce end to animal testing1991 Avon becomes the first beauty company to bring the alpha hydroxy technology1992 Avon U.K. launches the company’s first women’s health care initiative to raise funds and

Awareness for breast cancer.

Timeline Cont.1993 Avon launches its first women’s health care initiative program in the U.S. with the “Breast Cancer Awareness Crusade”  1999 First ever global advertising campaign themed ‘Let’s talk’1999 Andrea Jung becomes the first female CEO of Avon2000 Avon signs tennis greats, Venus and Serena Williams, to be the company’s first global celebrity spokespersons to promote Avon2004 Avon launches its first-ever Men’s Catalog, called M Avon foundation launches new domestic violence program, Speak Out Against domestic Violence with celebrity spokesperson Salma Hayek2005 Avon is the first company to be selected by the Chinese government to test direct selling The first fragrance in the newly-launched Today. Tomorrow. Always trilogy wins a FiFi Award2006 Avon forms creative partnership with celebrity makeup artist Jillian Dempsey2008 Sales hit the $10 billion milestone2012 Avon reported the number of North American reps fell 8%2014 Avon announced that they are eliminating the hazardous and toxic chemical triclosan

Mission and Vision Statement◦Mission Statement: “We will build a unique portfolio of Beauty and related brands, striving to surpass our competitors in quality, innovation, and value, and evaluation our image to become the Beauty Company most women turn to worldwide”◦Vision Statement: “To be the company that best understands and satisfies the product, service, and self-fulfillment needs of women-globally”

Strategy ◦Avon has values and principles that they follow as a company◦Values: “B-I-R-T-H”◦Principles: provide, serve, render, give, share, meet, and maintain◦Avon is also strategic within their operations

Operating◦Avon has company owned facilities and their party manufacturers◦Avon commits the same universal standard of quality and safety to all of their

products regardless of where they are manufactured or marketed, ensuring that customers worldwide are receiving the same product quality, efficacy, and safety

◦Supplier Code of Conduct◦Green Buildings, water conservation, distribution, emissions reduction, and

energy conservation◦No animal testing◦“Avon Paper Promise” and “Avon Palm Oil Promise”◦Packaging, recycling, and waste reduction

4 P’s ◦PRODUCT ◦PRICE◦PLACE◦PROMOTION

Financials

Period Ending Dec 31, 2015 Dec 31, 2014 Dec 31, 2013  

Total Revenue 6,160,500   7,648,000   8,496,800    

Cost of Revenue 2,445,400   3,006,900   3,172,800     

Gross Profit 3,715,100   4,641,100   5,324,000     

Operating Expenses  

Research Development -   -   -    

Selling General and Administrative 3,543,200   4,206,800   4,742,100    

Non Recurring 6,900   -   42,100    

Others -   -   -     

Total Operating Expenses -   -   -  

Operating Income or Loss 165,000   434,300   539,800  

Income from Continuing OperationsTotal Other Income/Expenses Net (21,800) (124,700) (144,000)Earnings Before Interest And Taxes 143,200   309,600   395,800  Interest Expense 120,500   108,800   117,900  Income Before Tax 22,700   200,800   277,900  Income Tax Expense 819,200   545,300   210,400  Minority Interest (3,300) (3,700) (4,500)

 

Net Income From Continuing Ops (796,500) (344,500) 67,500  

Non-recurring EventsDiscontinued Operations (349,100) (40,400) (119,400)Extraordinary Items -   -   -  Effect Of Accounting Changes -   -   -  Other Items -   -   -  

Net Income (1,148,900) (388,600) (56,400) Preferred Stock And Other Adjustments -   -   -  

Net Income Applicable To Common Shares (1,148,900) (388,600) (56,400)

Balance

Sheet

Dec 31, 2015 Dec 31, 2014 Dec 31, 2013

Assets

Current Assets

Cash And Cash

Equivalents686,900   1,107,900   1,107,900  

Short Term Investments -   -   -  

Net Receivables 443,000   515,600   676,300  

Inventory 624,000   707,700   967,700  

Other Current Assets 587,200   904,800   689,300  

Total Current Assets 2,341,100   3,064,500   3,441,200  

Long Term Investments -   -   -  

Property Plant and

Equipment766,900   1,036,800   1,393,300  

Goodwill 92,300   249,300   282,500  

Intangible Assets -   -   -  

Accumulated

Amortization-   -   -  

Other Assets 679,200   1,246,200   1,375,300  

Deferred Long Term Asset

Charges-   -   -  

Total Assets 3,879,500   5,596,800   6,492,300  

ASSETS

Liabilities

Current Liabilities

Accounts Payable 1,550,200   1,717,900   2,052,500  

Short/Current Long

Term Debt55,200   121,700   188,000  

Other Current

Liabilities589,700   307,600   -  

Total Current

Liabilities 2,195,100   2,147,200   2,240,500  

Long Term Debt 2,159,600   2,428,700   2,532,700  

Other Liabilities 581,200   715,600   591,600  

Deferred Long Term

Liability Charges-   -   -  

Minority Interest 13,900   15,500   17,400  

Negative Goodwill -   -   -  

Total Liabilities 4,949,800   5,307,000   5,382,200    

 

 

LIABILITIES

Stockholders' Equity

Misc Stocks Options

Warrants-   -   -  

Redeemable Preferred

Stock-   -   -  

Preferred Stock -   -   -  

Common Stock 187,900   187,600   189,400  

Retained Earnings 2,448,100   3,702,900   4,196,700  

Treasury Stock 4,594,100 (4,591,000) (4,581,200)

Capital Surplus 2,254,000   2,207,900   2,175,600  

Other Stockholder Equity 1,366,200 (1,217,600) (870,400)

Total Stockholder Equity (1,070,300) 289,800   1,110,100  

Net Tangible Assets (1,162,600) 40,500   827,600  

STOCKHOLDER’S

EQUITY

Comparison

ECON GEO …

Key Competitors◦Mary Kay ◦Revlon ◦L’Oreal

5 Forces Model

SWOT Analysis Strengths

Strong Brand Image Leading Position Gives Power

to Attract New Customers Popular Online Market Large Employment Base Pro-Environment No Animal Testing Multiple Retail Channels

Weaknesses Decreasing Revenue Growth Lack of Retail Stores Declining Operating Margins Advertising Cost Declining North American

Operations Low Market Share Compared

to Bigger Brands Outdated Technology Poor Marketing Customer Service Issues

 Opportunities

Identify Brand Development Overseas

Increase Upon Social Media Increase E-Commerce Going Green Geographic Growth Socially Conscious

Threats Easily Substituted Currency Fluctuation Competition Dependence on Third Party

Supplier Government Regulations Dependent on Others Needs

IFEStrength Weights Rating Weighted

ScoreStrong Brand Image 0.12 4 .48Leading position gives power to attract new customers.

0.04 3 .12

Popular online market 0.06 3 .18Large employment base 0.1 4 .4Pro- environment 0.04 3 .12No animal testing 0.04 3 .12Multiple retail channels 0.06 3 .18 Weaknesses

    

 

Decreasing Revenue Growth

.08 2 .16

Lack of Retail Stores .06 1 .06Declining operating margins

0.04 1 .04

Advertising cost 0.06 2 .12Declining North American operations

0.06 2 .12

Low market share compared to bigger brands

0.06 1 .06

Outdated Technology 0.06 1 .06Poor Marketing 0.08 1 .08Customer Service Issues 0.06 2 .12 

Total1   2.40

EFEOpportunities Weights Rating Weighted

ScoreIdentify brand development overseas

0.1 4 .4

Increase upon social media

0.12 3 .36

Increase E- Commerce 0.06 3 .18Going green 0.06 4 .24Geographic growth 0.12 2 .24Socially conscious 0.08 3 .24 Threats

     

Easily substituted .1 2 .2Currency fluctuation 0.06 1 .06Competition .1 2 .2Dependence on third party supplier

0.08 2 .16

Government Regulations

0.08 3 .24

Dependent on others needs

0.04 2 .08

Total 1   2.60

  TOWS

Matrix

Strengths:1. Strong Brand Image 2. Leading Position Gives Power to

Attract New Customers 3. Popular Online Market4. Large Employment Base5. Pro-Environment 6. No Animal Testing7. Multiple Retail Channels

Weaknesses:1. Decreasing Revenue Growth 2. Lack of Retail Stores3. Declining Operating Margins4. Advertising Cost5. Declining North American

Operations6. Low Market Share Compared to

Bigger Brands7. Outdated Technology 8. Poor Marketing 9. Customer Service Issues

     

Opportunities:1. Identify Brand Development

Overseas2. Increase Upon Social Media3. Increase E-Commerce 4. Going Green 5. Geographic Growth 6. Socially Conscious  

1. Maintain and enhance environmental awareness. (S5,O5)

2. Maintain and develop internet application to increase sales (S3,O2,O3)

3. Have a new marketing program to increase the number of people around the world that are ecofriendly (S5, O1,O4,O5)

4. Improve traffic to social media through links found on company website (S3,O2)

5. Portray and advertise more about their “green buildings” (S5,O4)

1. Increase awareness in the effort to protect the environment (W3, W8, O4)

2. Keep up to date with the latest social media and technology to get your products seen (W7, W8, O2)

3. Reduce advertising costs by using free social media outlets (W4, O3)

4. Create multiple social media accounts to advance marketing (W3, W8)

Threats: 1. Easily Substituted 2. Currency Fluctuation 3. Competition 4. Dependence on Third Party

Supplier 5. Government Regulations 6. Dependent on Others Needs

1. Have incentives for employees to increase sales (S4, T1, T3)

2. Advertise the ease and convenience of online shopping (S3, T1)

3. Promote discounts/offers when customers shop online( S3,T1)

 

1. Create new technology that will allow further advantage over competitors technology (W7,T3)

2. Create a program for auto-refill for customer orders. (W7,T6)

SPACE Matrix

IE

Conclusion

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