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Is Avon's Plan Enough? UBS Maintains Sell Rating

Is Avon's Plan Enough? UBS Maintains Sell Rating

Avon Products, Inc. (NYSE: AVP) maintained its Sell rating from UBS with an attached price target of $2 on Friday.

UBS commented in their research note that Avon had delivered a "comprehensive" strategy update at its Investor Day on Thursday in Suffern, New York.

At Investor Day, the company disclosed the latest on its current plans. Avon covered areas such as the future of its demand-driving initiatives and its FX-related expense alignment.

Related Link: Avon Hosts 2016 Investor Day And Reaffirms Full-Year 2015 Outlook

Looking Ahead

Avon has a new three-year transformation plan. According to the report, "AVP outlined a new 3-year transformation plan which aims to produce $350M in savings — sourced from headcount reductions & supply chain rationalization."

UBS also noted that Avon has plans to redeploy $350 million of the savings over the same three-year period. On another positive note, Avon's long-overdue narrowing and modernization of category focus will be taking place.

"On the positive, AVP addressed a number of concerns, including those related to its strategic focus (AVP is deprioritizing Home and possibly certain subscale geographies, elevating its core cosmetic/fragrance/skincare business, and within that, prioritizing its top 40 brands which represent 80 percent of the business) and Cerberus's future role in both N. America and AVP itself (all in, Cerberus came across as a credible partner)," UBS commented.

Avon had addressed at Investor Day, its "well-known" IT systems shortcomings, along with a plan for modernizing the company's ordering process. Avond will also be integrating its user interface with a focus on social and mobile.

Image Credit: By Jorge Barrios - Own work, Public Domain,

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