Avon Products, Incorporated (AVP), through its Chairman of the Board and CEO, Andrea Jung, has given its investors a brief performance overview for the third quarter of 2011. The company has shown its disappointment over the lower-than-expectations performance of its recovery during the period. There were difficulties with Brazil ERP implementation, which were responsible for the disruption in operations beyond expectations, having a considerable impact on the company��s top and bottom lines.
Avon has effectively increased its macro-economic volatility which also greatly affected the earnings issues. Although it is not yet reflected in the third quarter financials, the company has made some effective progress in its business strategies, particularly in North America. The company is accepting the fact that there will be no achievement of mid-single-digit sales growth and 50 to 70 basis points of operating margin development in 2011, given the present operating situation.
According to Jung, the company is committed to improving its performance and to is trying to position itself better with the renewing business landscape, while recognizing its inherent strength as a business model. With constant dollars considered, the company still upped revenues by 1.4 percent. The beauty segment slightly grew even more, making 3 percent growth.
The disappointing report took the stock down by nearly 20% overnight, from the short-term high of $23.85 to the $18.99 price. Yet, if the stock, which is currently trading at $19.12 is able to stay above the $19 support, it should recover fairly quickly and might challenge the $24 or even the $35 (a three-year peak) once again.
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