What Are Avon’s Key Sources Of Revenue?

Avon’s (NYSE: AVP) key sources of revenues come from from their four geographical segments: Europe, Middle East & Africa; South Latin America; North Latin America; and Asia Pacific from which most revenue comes out from the sale of Beauty products majorly responsible for more than 83% of the company’s revenues. Avon’s Representative fee also contribute to the companies total net revenue. Below we discuss the company’s key revenue sources and its expected 2018 performance using an interactive dashboard What Are Avon’s Key Sources of Revenues. You can modify our forecasts for the company’s revenues and key drivers to see how changes would impact its earnings.

Avon’s performance across different regions was a mixed-bag in the second quarter. Its revenues were up by 1% y-o-y in the Europe, Middle East & Africa (EMEA) segment (~37%), however was down by 8% in South Latin America (~38%), where Brazil suffered an outsized impact from the trucking strike in the second quarter.  In North Latin America (~15%), revenues were relatively unchanged, while the Asia-Pacific division’s (~8%) revenue was down by 1%. A similar trend was observed in the company’s Ending Representative figures across geographies. Active Representatives and Ending Representative declined 4% each, driven by decreases in South Latin America, primarily Brazil, Europe, Middle East & Africa, and North Latin America, but majorly hit by the Brazil truckers’ strike.

During the recent Q2 earnings, its top line declined to $1.4 billion, down 3% on a y-o-y basis,  as compared to the same period last year, due to the impact of adopting the new revenue recognition standard required by generally accepted accounting principles in the United States (“GAAP”). Avon has also experienced a decline in Active Representatives and Ending Representatives.  Each declined 4% excluding the Brazil truckers’ strike. Avon’s bottom line remained dampened as it experienced continued variability with challenges in key markets, particularly Brazil, where it was facing bad debt, challenges with representative retention, as well as stiff competition from other players. Looking ahead for Q3, with the recent inductions made in Avon’s top management, the company is positive that injecting new talent and capabilities into the business will steer Avon toward the path of growth. The company is focused to generate efficiencies, and will strive to improve on these second quarter trends in the second half by strategically redirecting investments to support underlying growth initiatives.

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