Avon invests $120m in product and training to stay relevant

By

Cassidy Mantor

Published
Oct 25, 2017

In the hope of regaining market relevance, Avon's President, Miguel Fernandez, has directed the company to invest $120m to improve product, make technological updates, and to train its sales people to perform better.

Fernandez is leading Avon into a new stage, where the company will place more of a focus on its six million global sales people. Some $110 million dollars will go to new product development and training. The remaining $10 million will be used update technology to help expand the retail network.

Fernandez was named global president of Avon last August. He replaced John Higson, who was with Avon since 1985, and has been tasked with refreshing the company's business. The company continues to be in a state of transition as its CEO Sheri McCoy recently left, after five years of service.

Avon has been in a financial slump for the past several months. This year's second-quarter period, from April to June, saw a loss of $46 million, compared to a loss of $36 million last year for the same period. In the same quarter, sales fell by 3 percent, down to $1.4 billion dollars.

Avon saw its biggest success in the US in the 1950s and 60s. Since then, Sephora and Ulta have witnessed exponential growth, taking sales from Avon in recent years. Moreover, as Target and Kohl's carve out even more affordable beauty partnerships, Avon struggles with keeping a grasp on its North America market.

Additionally, Avon also fell behind in e-commerce. While other brands offered omni-channel experiences, Avon's direct sales model did not factor into changing consumer preferences or shopping trends.

Avon has responded by chasing its Latin American business. Brazil is the company's largest growth market, followed by Fernandez' native Mexico. In addition to sales, Avon operates a manufacturing plant in Mexico which will presumably be producing new innovative products that will keep the brand alive in the Americas.