Andrea Jung, Avon’s chairman and CEO, had to go on the defensive after the company reported a 15% decrease in profits for the fourth quarter. Blaming “execution” problems and governmental/economic issues in Brazil and Russia, she attempted to explain Avon’s plummeting profits to Wall Street analysts.
According to WWD, analysts were pretty blunt in their questioning. Andrea had to address questions like, “[S]houldn’t there be a bunch of people who lose their jobs over such awful execution?” Her answers were a little cagey, but it sounds like some organizational changes may be on the way. “I’ve got to make sure we’ve got the right organizational structure, which may be different than it has been,” was one of her responses.
Avon is going to upgrade aging technology in Brazil and spend less on advertising in Russia to offset tax rules there that were affecting salespeople in that country.
But honestly, doesn’t Avon have bigger problems? They’ve been struggling for years with their image and it’s no secret in the industry that they’ve been trying to modernize it for a long time. The Mark line was a step in the right direction and it’s won industry awards for innovation.
But what about how it sells product? Is the “Avon Lady” concept becoming obsolete? You can buy Avon products online, but the company still relies heavily on its fleet of “door-to-door” smiling entrepreneurs. It’s facing stiff competition from drugstore brands that have deep pockets and are constantly churning out new products (Hello, L’Oreal Paris!) and retailers and online boutiques like Sephora that can offer variety at all price points.
Avon has an amazing charitable component to its business, but its squeaky clean image and the celebs that are its face sometimes make the company come off as frumpy. MAC and others have a philanthropic arm, too, yet they seem modern and relevant.
So how to modernize the Avon lady?