Avon Products

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For other uses, see Avon.
Avon Products, Inc.
Type Public
Traded as NYSEAVP
S&P 500 Component
Industry Personal
Founded 1886
Founder(s) David H. McConnell
Headquarters New York City, United States
Key people Andrea Jung
(Executive Chairman)
Sherilyn S. McCoy
(CEO)
Products Cosmetics
Perfume
Clothing
Toys
Revenue Decrease US$ 9.955 billion (2013)[1]
Operating income Decrease US$ 427.2 million (2013)[1]
Net income Decrease US$ -51.9 million (2013)[1]
Total assets
  • Decrease US$ 6.4923 billion (2013) [2]
  • Decrease US$ 7.3825 billion (2012) [2]
Total equity Decrease US$ 1.127 billion (2013)[1]
Employees 36,700 (Dec 2013)[1]
Website www.avoncompany.com

Avon Products, Inc, known as Avon, is an American international manufacturer and direct selling company in beauty, household, and personal care categories. As of 2012, Avon had annual sales of $10.0 billion worldwide in 2013.

It is the fifth-largest beauty company and second largest direct selling enterprise in the world, with 6.4 million representatives.[3] Avon Products is a multi-level marketing company.[4] The company's CEO is Sherilyn S. McCoy, who was appointed to that position in April 2012.[5] The former CEO, Andrea Jung, became the executive chairman of the board.

History[edit]

David H. McConnell[edit]

In 1886, David H. McConnell started the business in a small office at 126 Chambers Street, in lower Manhattan, New York City. In 1892, McConnell changed the company name when his business partner, who was living in California, suggested that he call the business the California Perfume Company, because of the great abundance of flowers in California.[6]

In 1894, Alexander D. Henderson, Vice-President and Treasurer, joined the company and helped to shape its policies and assist in its growth.[7] On June 16, 1909, McConnell and Henderson signed an agreement of Corporation for the California Perfume Company in the state of New Jersey.[8] On January 28, 1916, the California Perfume Company was incorporated in the state of New York. McConnell, Henderson, and William Scheele were listed as company officials.[9]

Early Avon trademark[edit]

Original Avon trademark, filed June 3, 1932
The drawing stylized word AVON mark is an expired trademark at the USPTO, and owned by Avon Products, Inc.

The California Perfume Company, Inc. of New York filed their first trademark application for Avon on June 3, 1932 with the USPTO. Part of the description for goods and services provided to the USPTO included "perfumes, toilet waters, powder and rouge compacts, lipsticks", and other toiletry products. First use and commercial use for Avon by the California Perfume Company was on September 1, 1929. Registration was granted on August 30, 1932. The trademark is owned by Avon Products, Inc. of New York. The status of the original stylized word mark for Avon is expired.[citation needed]

Global expansion[edit]

Avon sells products in over 140 countries. Brazil is the company's largest market, passing the United States in 2010. Avon entered the Chinese market in 1990, but legal changes in 1998 forced Avon to sell only through physical stores called Beauty Boutiques. The company received China's first license for direct selling in 2006.[3]

Mergers and acquisitions[edit]

Avon purchased Silpada, a direct seller of silver jewelry, in 2010 for $650 million.[3] In May 2012, perfume company Coty offered $24.75 a share for Avon, which was nearly 20 percent above Avon's stock price at the time. While Fox Business Network reported that Avon delayed the process and Coty withdrew its offer,[10] earlier reports revealed that Avon actually rejected the bid, stating "At the time, the board concluded, and it still believes, that Coty's indication of interest is opportunistic and not in the best interest of Avon's shareholders."[11][12][13]

Business model[edit]

Avon uses both door-to-door sales people ("Avon ladies" primarily, and a growing number of men) and brochures to advertise its products.[14] Avon training centers help women who want to become Avon representatives selling beauty products, jewelry, accessories and clothing. The Avon training centers can have a small retail section with skin care products, such as creams, serums, makeup, and washes. There are classroom areas where the representatives learn about the products and sales techniques. Each Avon representative is an independent sales representative running their own business. Some of the brands include Avon, Avon Naturals, Skin-So-Soft and Mark.[citation needed]

Avon training center

The corporate governance guidelines and code of business conduct and ethics are available on Avon's website.[15]

Avon Foundation[edit]

In addition to its corporate pursuits, the Avon corporation is involved in philanthropic causes. The Avon Foundation for Women is the largest corporate philanthropy dedicated to women's causes globally.[16] Avon founded the Avon Foundation for Women with its first grant, a $400 scholarship, in 1955. Avon was committed to helping women achieve their highest potential of economic opportunity and self-fulfillment by empowering them through scholarships and support for other forms of educational and occupational training and advancement. Women's empowerment continued to be the focus through the early 1990s, when Avon began to increase its philanthropy with a new emphasis on breast cancer. The Avon Foundation still awards scholarships for Avon Sales Representatives and their families, as well as for the children of Avon associates. Today, Avon philanthropy focuses its funding on breast cancer research and access to care through the Avon Breast Cancer Crusade, and efforts to reduce domestic violence through its Speak Out Against Domestic Violence program.[17] Through 2012, Avon global philanthropy, led by the Avon Foundation, has donated more than $910 million in more than 50 countries.[18]

Avon Walk for Breast Cancer[edit]

The Avon Walk for Breast Cancer

The Avon Walk for Breast Cancer is a series of eight, weekend-long walk events held each year in major cities across the U.S.[19] Before 2003, the Walk was a function of Pallotta Teamworks, with Avon being the beneficiary. Since 2003, more than 180,000 Walk participants and volunteers have raised $472 million to accelerate breast cancer research and help women and men get screening, support, and treatment.[20][21]

Restatements[edit]

In Sep 14, 2000, Avon restated its financial statements to reflect the additional write off as of March 31, 1999 of all capitalized costs, associated with the FIRST project as of that date and a reversal of the charge recorded in the third quarter of 2001. In 2001, Avon adopted new provisions and as a result, all prior periods were restated to reflect shipping and handling fees.[22]

Legal allegations[edit]

Since at least 2008, the conduct of various employees and executives of Avon has been investigated for possible violations of the law, including possible bribery and violations of the Foreign Corrupt Practices Act.[23] Avon began a probe of its China division after allegations of bribery in June 2008.[24] At least four executives, both in Asia and in the United States, were suspended in 2010,[24] and later fired for their roles in the activities being investigated.[25] According to the New York Times, Avon has spent over $170 million on legal fees and costs related to the investigation: $59 million in 2009 and $95 million in 2010, and $22.5 million for the first quarter of 2011.[26] The Times reported that the final tally may be close to $250 million, after which Avon would report the findings to the United States Department of Justice and the Securities and Exchange Commission and try to negotiate the penalties that those entities may impose.[26] On February 24, 2011, Avon filed a report with the Securities and Exchange commission highlighting the investigation as a corporate risk factor that could cause investor loss.[27]

Avon France, the French operations[edit]

On 14 October 2013, Avon announced the closure of its branch in Paris, France at the end of that month. Its French representatives accused it of keeping the workers in the dark for months and not acting in line with the companies publically stated values of being a socially responsible company that upholds values of trust, respect and integrity and a culture of "open and candid communication".[28] As of January 2014, Avon France has begun receivership.[29]

See also[edit]

  • IR3535, the repellent found in Avon Skin So Soft.

References[edit]

  1. ^ a b c d e AVON PRODUCTS, INC. Form 10-K, Securities and Exchange Commission, February 26, 2014
  2. ^ a b "AVON PRODUCTS INC 2013 Annual Report Form (10-K)" (XBRL). United States Securities and Exchange Commission. February 26, 2014. 
  3. ^ a b c Kowitt, Beth (April 30, 2012). "Avon: The Rise and Fall of a Beauty Icon". Fortune 165 (6): 106–114. Retrieved April 29, 2012. 
  4. ^ Lubove, Seth (2008-05-28). "Aegon in Missouri Provokes Regulators Finding Sales Deceptions". Bloomberg. Retrieved 2011-01-05. 
  5. ^ Lublin, Joann S.; Glazer, Emily (April 10, 2012). "Avon Names J&J's McCoy as CEO". The Wall Street Journal. p. B1. Retrieved April 9, 2012. 
  6. ^ Quote from an interview with David McConnell, Sr., April 15, 1936. Avon Achieves, IE7, 1936.
  7. ^ "The Story of the C P C, A Brief Sketch of the Upbuilding of a Great Business". California Perfume Company. Retrieved 2012-12-17. 
  8. ^ "Agreement of Incorporation for California Perfume Company". Hagley Museum and Library. Retrieved 2012-12-17. 
  9. ^ Weekly Drug markets, New Incorporations, Volume 2, Page 26. Google eBooks. Retrieved 2012-12-17. 
  10. ^ McIntyre, Douglas A. "10 Brands That Will Disappear in 2013". Fox Business. 
  11. ^ Smith, Aaron (2012-04-02). "Avon rejects $10 billion offer from Coty - Apr. 2, 2012". Money.cnn.com. Retrieved 2012-09-03. 
  12. ^ Dominic Rushe in New York (2012-04-02). "Avon rejects $10bn takeover bid from celebrity-fragrance company Coty | World news | guardian.co.uk". Guardian. Retrieved 2012-09-03. 
  13. ^ Tiffany Hsu (April 2, 2012). "Avon rejects Rimmel owner Coty's $10-billion bid - Los Angeles Times". Articles.latimes.com. Retrieved 2013-04-16. 
  14. ^ Klepacki, Laura (2005). Avon: Building the World's Premier Company for Women. John Wiley and Sons. ISBN 0-471-71026-1. Retrieved April 4, 2013. 
  15. ^ "Investor Relations". Avon. Retrieved 2012-12-18. 
  16. ^ Avon Foundation website, "About the Foundation", June 2013
  17. ^ Klepacki, Laura (2005). Avon: Building The World's Premier Company For Women. John Wiley and Sons. p. 218. ISBN 0-471-73923-5. Retrieved 2008-06-13. 
  18. ^ Avon Foundation website, "Our Causes", June 2013
  19. ^ Avon Walk website, "Cities and Dates", June 2013
  20. ^ Avon Walk website, "How Your Donations Help", June 2013
  21. ^ Avon Foundation website, "Breast Cancer Events", June 2013
  22. ^ "Avon Reports Record Fourth Quarter and Full-Year Results, In Line With Expectations". 
  23. ^ "Reuters report". Reuters. Retrieved 2012-09-03. 
  24. ^ a b http://www.reuters.com/article/2010/04/13/avon-china-idUSN1318680420100413 Reuters
  25. ^ http://www.bloomberg.com/news/2011-05-04/avon-says-it-fired-four-executives-in-china-over-bribes.html Bloomberg News
  26. ^ a b http://dealbook.nytimes.com/2011/05/06/the-high-price-of-internal-investigations/ N.Y. Times
  27. ^ "Avon 10-K report". Sec.gov. Retrieved 2012-09-03. 
  28. ^ "Avon to close its French operations". BBC News. 14 October 2013. Retrieved 14 October 2013. 
  29. ^ Weil, Jennifer (28 January 2014). "Avon France Said Seeking Receivership". WWD. Retrieved 29 January 2014. 

External links[edit]