Avon Products, Inc. went straight to the heart of the matter when it reported second-quarter 2012 results, which were down 9% (down 1% in constant dollars) with total revenue of $2.6 billion. Total units declined by 4% and price/mix increased 3% during the quarter. Active Representatives were down 3%.
"Avon's second-quarter financial results are not good and they reflect the complex challenges that Avon faces. We are working to stabilize the top-line, improve cost structure and cash generation, and instill a more disciplined culture of accountability," said Sheri McCoy, Avon's CEO. "We will also put the consumer and Representative back at the center of our business and ensure our associates are engaged and aligned. It will take time, but I am confident that we can turn the business around and reach a point of sustainable growth."
On a reported basis, fragrance was down 8%, color was down 9%, and skincare and personal care both declined by 10%. On a constant-dollar basis, fragrance increased 1%, color was flat, and skincare and personal care were both down 1%. Second-quarter 2012 gross margin was 62.8%, 160 basis points lower than the prior-year quarter, due to higher product costs impacted by inflationary pressures, as well as negative impact from foreign exchange.