LONDON, January 22, 2013 /PRNewswire/ --
Tough economic
scenario plays havoc on all kinds of stocks, but its impact is more
pronounced for the sectors led by discretionary spending. When one
has to budget ones income and spending, it is obvious that he would
put his basic needs over his desire to spend money on facial creams
and other personal care products. In light of this, StockCall has
started preliminary reporting on Nu Skin Enterprises Inc. (NYSE:
NUS) and Avon Products Inc. (NYSE: AVP). Access these free reports
now at http://www.stockcall.com/todaysopinions
Tough Times at
Avon
So, naturally, companies like Avon Products Inc. and Nu Skin
Enterprises are going through tough times. Avon has been long regarded as an attractive
stock for investors looking for its steady dividend income.
However, late last year, the company announced a dividend cut,
bucking the 22-year long trend of dividend increases. Get our
analyst technical insight on Avon
by registering today at http://www.StockCall.com/AVP012213.pdf
Dividend cut is not the only woe that this direct sales giant is
facing. In fact, dividend cut in itself points to bigger strategic
level problems with the company. Avon had been facing declining EPS for the
past couple of years. The first three quarters of the current
fiscal year have not been kind either. The company not only
reported a decline in its EPS, but its revenue also dropped. It now
seems to be in the full life-saving mode to regain its position in
the industry. The company let go of its long time CEO Andrea Jung, who has been partially blamed for
the decline in the company's fortunes. Under Jung's leadership,
Avon tried to make foray into the
traditional retail model for its products, veering away from its
unique proposition of being a direct sales company. As the
financial figures would tell you, the move failed miserably as the
new strategy placed the company directly in competition with
personal care products giants like P&G and Johnson &
Johnson.
Nu Skin Does
Relatively Better
Nu Skin Enterprises Inc. [Free Research Report on NUS]
[1], on the other hand, is looking
to report 19 percent increase in its revenue for the fourth quarter
of the year. It is scheduled to announce its fourth quarter
financial numbers on February
6th. However, not all is well with Nu Skin
either. The company's business model is under considerable scrutiny
after the Herbalife hullabaloo in the market. Like Herbalife, Nu
Skin also operates on Multi Level Marketing model and thus is
likely to be taken as a pyramid scheme. Nu Skin has the usual mix
of anti ageing products and nutritional supplements in its
portfolio. While the company is reporting consistent growth in its
sales and profits, it is difficult to ignore that MLM companies
have long been accused of providing misleading figures. Therefore,
it is difficult to take the financial numbers at their face
value.
Both Avon and Nu Skin are
looking to expand their brands in international markets. While
Avon started the process under its
erstwhile CEO Andrea Jung and
yielded lukewarm results, Nu Skin is about to go ahead with its
five-year plan to consolidate its position in emerging markets like
China.
Avon is also looking at dire
times as it plans to slash its workforce by 1,500 in order to
curtail costs. The company also made questionable decision to
forego Coty offer of $24.75 per
share. Its stock is now trading in the vicinity of $16 a pop. Apart from tough economic scene, both
the companies seem to be dealing with myriad of internal problems
like questionable business model and inefficiencies.
Footer:
- Nu Skin Enterprises Inc. Technical Analysis [
http://www.StockCall.com/NuSkinEnterprisesInc012213.pdf ]
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