Avon Products, Inc. (AVP) - Bear of the Day
November 08 2011 - 6:00PM
Zacks
We have downgraded our long-term recommendation on
Avon
Products, Inc. (AVP) to Underperform following the weak
quarterly performance in the third quarter of 2011. The quarterly
earnings of $0.38 per share fell short of the Zacks Consensus
Estimate of $0.46 and dipped 7.3% from the year-ago quarter
battered by increased product costs.
The North American market continues to be sluggish in the
ongoing fiscal 2011. Moreover, the company's initiatives to change
the product mix and reposition the business in the U.S. market will
require significant expenditure to support increased advertising
and promotional activities, which may dent its margins.
Furthermore, Avon is a highly leveraged company, limiting its
financial flexibility to drive future growth. Additionally, the
company faces stiff competition from other well established players
and has significant exposure to foreign currency translations.
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