Avon’s Chinese bribery allegations have lurked for some time, but the US direct selling giant has now warned - officially - that moves to resolve the allegations could hit its business hard.
Avon’s sombre warning regarding the ongoing US Securities and Exchange Commission (SEC) probe – the SEC has rejected Avon’s $12m offer to settle charges for breaching the Foreign Corrupt Practices Act – soon hit Avon shares, falling almost 23% to the $17.30 mark in trading late last week.
Investor sentiment has not been helped additionally by a bleak set of sales figures: Chinese revenues slid almost 70% while, more broadly, revenues decelerated 7% to $2.3bn compared to the same time frame a year ago.
Even its US business made an operational loss, surprising investors and Wall Street. To round off the grim numbers, more Venezuelan currency weakness creamed off $15m for the company. Avon boss Sheri McCoy put a brave gloss on the situation, saying the company remained broadly on the right track: “Parts of our business are stabilising, and we are making good progress toward our three-year financial goals.”
