Avon Products posted revenue of $ 1.846 billion in Latin America, a 27% drop year-on-year.
From cosmetics, perfumes and toys to costume jewelry and household goods, Avon manufactures and markets beauty and related products.
Above all, Avon’s revenues were impacted by certain indirect taxes recognized in Brazil.
Excluding this, adjusted revenues for the region decreased 25%, negatively affected by the exchange rate, which was driven by the strengthening of the US dollar in relation to multiple currencies, mainly the Brazilian real, the Argentine peso and the Mexican peso.
In constant dollars, Avon’s adjusted revenue fell 10%, in part due to a 10% decline in active reps in all markets.
Declining revenue and constant dollar adjusted revenue were affected by the Covid-19 pandemic, which affected early signs of recovery from a lower representative base in 2019, with the third and fourth quarters showing improving trends in the Latin American markets and revenue growth in Brazil and Mexico.
The increase in SG&A as a percentage of constant dollar adjusted revenue was largely due to the impact of Covid-19, which led to the deleveraging of the company’s fixed expenses as a percentage of lower revenue and investments. additional in distribution related to the security actions of Covid-19.
Avon conducts its business in the highly competitive beauty industry and competes with other consumer packaged products and direct selling companies to create, manufacture and market beauty and non-beauty products.
The business is conducted primarily in one channel, direct selling, and Avon’s strategy is to expand to omnichannel.
Since its merger with Natura Cosméticos S.A., Avon has updated its reportable segments to align them with the way the business is currently operated and managed.
The most significant impact of the pandemic for Avon was felt during the second quarter of 2020, as many markets were subject to lockdown restrictions that limited our ability to recruit and enroll Representatives, operate manufacturing facilities and distribution centers, and process and deliver. orders.
The pandemic primarily resulted in reduced revenue, which in turn affected profitability and cash generation.