Changes for page Avon Products
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... ... @@ -6,108 +6,27 @@ 6 6 7 7 Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua. Ut enim ad minim veniam, quis nostrud exercitation ullamco laboris nisi ut aliquip ex ea commodo consequat. Duis aute irure dolor in reprehenderit in voluptate velit esse cillum dolore eu fugiat nulla pariatur. Excepteur sint occaecat cupidatat non proident, sunt in culpa qui officia deserunt mollit anim id est laborum. 8 8 9 -== ==Business====9 +== Sub-paragraph == 10 10 11 - Avon Productsisa globalmanufacturerandmarketerof beautyandrelatedproducts. Thecompanycommenced operationsin 1886 andwereincorporatedheStateof NewYorkon January 27, 1916. Thecompanyconductitsbusiness inthe highlycompetitivebeautyindustry andcompeteagainstother consumerpackaged goods("CPG")and direct-sellingcompanies tocreate, manufactureand marketbeautyandnon-beauty-relatedproducts.The company's productcategoriesareBeauty andFashion& Home. Beautyconsistsofskincare,fragranceandcolor(cosmetics).Fashion & Homeconsistsof fashionjewelry, watches,apparel, footwear,accessories,gift and decorativeproducts,housewares,entertainmentandleisureproducts, children’sproductsandnutritionalproducts.11 +Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua. Ut enim ad minim veniam, quis nostrud exercitation ullamco laboris nisi ut aliquip ex ea commodo consequat. Duis aute irure dolor in reprehenderit in voluptate velit esse cillum dolore eu fugiat nulla pariatur. Excepteur sint occaecat cupidatat non proident, sunt in culpa qui officia deserunt mollit anim id est laborum. 12 12 13 - Thecompany's business is conducted primarily in one channel, direct selling. The company's reportable segments are based on geographic operations in four regions: Europe, Middle East & Africa;South Latin America; North Latin America; and Asia Pacific. Financial information relating to its reportable segments is included in "Segment Review" within Management’s Discussion and Analysis of Financial Condition and Results of Operations, which the company refer to in this report as "MD&A," on pages 27 through 55 of this Annual Report on Form 10-K for the year ended December 31, 2017, which the companyrefer to in this reportas its "2017 Annual Report," and in Note 14, Segment Information, to the Consolidated Financial Statements onpages F-42 throughF-44 of its 2017 Annual Report. The company refer to each of the Notes to the Consolidated Financial Statements in this 2017 Annual Report as a "Note." Information about geographic areas is included in Note 14, Segment Information on pages F-42 through F-44 of its 2017 Annual Report. All of its consolidated revenue is derived from operations of subsidiaries outside of the United States ("U.S.").13 +== Sub-paragraph == 14 14 15 - In December 2015, the company entered into definitive agreementswith affiliates of CerberusCapitalManagementL.P. ("Cerberus"),which includeda$435investmentinAvon by an affiliate ofCerberusthroughtheurchaseofitsconvertiblepreferred stockand theseparationof the NorthAmericabusiness(includingapproximately$100 of cash, subjectto certain adjustments)fromAvonintoNew Avon LLC ("New Avon"), a privately-held companythatismajority-owned and managed by an affiliateof Cerberus.Thesetransactionsclosed in March2016and Avonretainedapproximately 20% ownershipin New Avon. The company's NorthAmericabusinesshadconsistedfthe Company'soperations in the U.S.,Canada and Puerto Rico; thisbusinesswas previouslyits own reportablesegment, andhas been presented as discontinuedoperationsfor allperiods presented.RefertoNote3, DiscontinuedOperations andDivestitureson pages F-19 throughF-20 ofs2017 AnnualReportand Note4, InvestmentinNew Avon on pageF-20 of its2017 Annual Report for additionalinformation regardingtheinvestmentby an affiliateof Cerberus andtheseparationoftheNorthAmericasiness.15 +Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua. Ut enim ad minim veniam, quis nostrud exercitation ullamco laboris nisi ut aliquip ex ea commodo consequat. Duis aute irure dolor in reprehenderit in voluptate velit esse cillum dolore eu fugiat nulla pariatur. Excepteur sint occaecat cupidatat non proident, sunt in culpa qui officia deserunt mollit anim id est laborum. 16 16 17 -=== =Distribution====17 +=== Sub-sub paragraph === 18 18 19 - During2017, the companyhadsales operationsin56countries andterritories,anddistributeditsproducts in18othercountriesandterritories.19 +Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua. Ut enim ad minim veniam, quis nostrud exercitation ullamco laboris nisi ut aliquip ex ea commodo consequat. Duis aute irure dolor in reprehenderit in voluptate velit esse cillum dolore eu fugiat nulla pariatur. Excepteur sint occaecat cupidatat non proident, sunt in culpa qui officia deserunt mollit anim id est laborum. 20 20 21 -Unlike most of its CPG competitors, which sell their products through third-party retail establishments (e.g., drug stores and department stores), the company primarily sell its products to the ultimate consumer through the direct-selling channel. In its case, sales of its products are made to the ultimate consumer principally through direct selling by Representatives, who are independent contractors and not its employees. As of December 31, 2017, the company had approximately 6 million active Representatives which represents the number of Representatives submitting an order in a sales campaign, totaled for all campaigns during the year and then divided by the number of campaigns. Representatives earn by purchasing products directly from it at a discount from a published brochure price and selling them to their customers, the ultimate consumer of its products. Representatives can start their Avon businesses for a nominal fee, or in some markets, for no fee at all. The company generally have no arrangements with end users of its products beyond the Representative, except as described below. No single Representative accounts for more than 10% of its net sales globally. 22 22 23 - ARepresentative contacts theircustomers directly, selling primarily through its brochure, which highlights new productsand special promotions for eachsalescampaign. In this sense, the Representative, together with the brochure, are the "store" through which its products are sold. A brochure introducing a new sales campaign is typically generated every three to four weeks. Generally, the Representative forwards an order for a campaign to it using the Internet, paper, telephone, or fax. This order is processed and the products are assembled at a distribution center and delivered to the Representative usually through a combination of local and national delivery companies. Generally, the Representative then delivers the merchandise and collects payment from the customer for her or his own account. A Representative generally receives a refund of the price the Representative paid for a product if the Representative chooses to return it.22 += Paragraph 2 = 24 24 25 - The companyemploy certainweb-enabled systemstoincreaseRepresentativesupport,whichallow a Representativetorun herorhis businessmoreefficientlyandalsoallow it to improveitsorder-processing accuracy.Forexample,inmany countries,Representatives canutilizethe Internet tomanagetheirbusinesselectronically, includingordersubmission,ordertracking,paymentandcommunicationswithit.Inaddition,inmany markets, Representativescanfurtherbuild theirown businessthroughpersonalizedwebpages provided by it,enabling them to sella completelineofitsproductsonline.Self-pacedonlinetrainingalsoisavailableincertainmarkets.24 +Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua. Ut enim ad minim veniam, quis nostrud exercitation ullamco laboris nisi ut aliquip ex ea commodo consequat. Duis aute irure dolor in reprehenderit in voluptate velit esse cillum dolore eu fugiat nulla pariatur. Excepteur sint occaecat cupidatat non proident, sunt in culpa qui officia deserunt mollit anim id est laborum. 26 26 27 - Insome markets, the companyuse decentralizedbranches, satellite stores and independent retail operations (e.g., beauty boutiques) to serve Representatives and other customers. Representatives come to a branch to place and pick up product orders for their customers. The branches also create visibility of the Avon brand and channel with consumers and help reinforce its beauty image. In certain markets, the company provide opportunities to license its beauty centers and other retail-oriented and direct-to-consumer opportunities to reach new customers in complementary ways to direct selling. In the United Kingdom and certain other markets, the company also utilize e-commerce and market its products throughconsumer websites.26 +== Sub-paragraph == 28 28 29 - Therecruitingor appointing and training of Representatives are the primaryresponsibilitiesofdistrictsalesmanagers,zonemanagersandndependent leaders. Dependingon themarket and the responsibilities of the role, some oftheseindividualsare its employees andsome are independentcontractors. Thosewho are employees arepaid a salary and an incentive basedprimarily onheachievementof a sales objective in their district. Those who areindependentcontractors arerewarded primarily based ontotalsales achievedintheirzones or downline teamof recruited, trainedandmanaged Representatives. Personal contacts,includingrecommendationsfrom currentRepresentatives (includingthesales leadership program), and local marketdvertising constitutethe primary means of obtaining new Representatives. The salesleadership programis a multi-levelcompensation program which givesRepresentatives, known asindependentleaders, the opportunityto earn discounts on their own sales of itsproducts,as wellascommissions based onthe netsales made by Representativesthey have recruitedand trained. This program generallylimits the numberoflevelsonwhich commissionscan be earned to three. Theprimary responsibilities of independent leaders are the prospecting, appointing,trainingand developmentoftheirdownlineRepresentativeswhilemaintaining acertainlevel of their own sales. As described above, the Representativeis the"store" through whichthecompany primarily sellitsproductsand, given the highrate of turnoveramong Representatives, which is a common characteristicof directselling, itiscritical that theompanyrecruit, retainandserviceRepresentativeson acontinuingbasisinorderomaintainandgrowits business.28 +Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua. Ut enim ad minim veniam, quis nostrud exercitation ullamco laboris nisi ut aliquip ex ea commodo consequat. Duis aute irure dolor in reprehenderit in voluptate velit esse cillum dolore eu fugiat nulla pariatur. Excepteur sint occaecat cupidatat non proident, sunt in culpa qui officia deserunt mollit anim id est laborum. 30 30 31 - Fromtime to time, local governments and others question the legal status of Representatives or imposeburdens inconsistent with their status as independent contractors, often in regard to possible coverage undersocial benefit laws that would require it (and, in most instances, the Representatives) to make regular contributions to government social benefit funds. AlthoughAvon Products has generally been able to address these questions in a satisfactory manner, these questions can be raised again following regulatory changes in a jurisdiction or can be raised in other jurisdictions. If there should be a final determination adverse to it in a country, the cost for future, and possibly past, contributions could be so substantial in the context of the volume and profitability of its business in that country that the company would consider discontinuing operations in that country.30 +== Sub-paragraph == 32 32 33 -==== Promotion and Marketing ==== 34 - 35 -Sales promotion and sales development activities are directed at assisting Representatives, through sales aids such as brochures, product samples and demonstration products. In order to support the efforts of Representatives to reach new customers, specially designed sales aids, promotional pieces, customer flyers, television advertising and print advertising may be used. In addition, the company seek to motivate the Representatives through the use of special incentive programs that reward superior sales performance. Periodic sales meetings with Representatives are conducted by the district sales or zone managers. The meetings are designed to keep Representatives abreast of product line changes, explain sales techniques and provide recognition for sales performance. 36 - 37 -The company use a number of merchandising techniques, including promotional pricing for new products, combination offers, trial sizes and samples, and the promotion of products packaged as gift items. In most markets, for each sales campaign, the company publish a distinctive brochure, in which the company introduce new products and special promotions on selected items, or give particular prominence to a particular category. A key priority for its merchandising is to continue the use of analytical tools to enable a deeper, fact-based understanding of the role and impact of pricing within its product portfolio. 38 - 39 -From time to time, various regulations or laws have been proposed or adopted that would, in general, restrict the frequency, duration or volume of sales resulting from new product introductions, special promotions or other special price offers. The company expect its broad product lines and pricing flexibility to mitigate the effect of these regulations. 40 - 41 -==== Competitive Conditions ==== 42 - 43 -The company face competition from various products and product lines. The beauty and beauty-related products industry is highly competitive and the number of competitors and degree of competition that the company face in this industry varies widely from country to country. The company compete against products sold to consumers in a number of distribution methods, including direct selling, through the Internet, and through the mass market retail and prestige retail channels. 44 - 45 -Specifically, due to the nature of the direct-selling channel, the company often compete on country-by-country basis, with its direct-selling competitors. Unlike a typical CPG company which operates within a broad-based consumer pool, direct sellers compete for representative or entrepreneurial talent by providing a more competitive earnings opportunity or "better deal" than that offered by the competition as well as significant competition from other non-direct selling earnings opportunities for which the existing Representatives or potential Representatives could avail themselves. Providing a compelling earnings opportunity for the Representatives is as critical as developing and marketing new and innovative products. As a result, in contrast to a typical CPG company, the company must first compete for a limited pool of Representatives before the company reach the ultimate consumer. 46 - 47 -Within the broader CPG industry, the company principally compete against large and well-known cosmetics (color), fragrance and skincare companies that manufacture and sell broad product lines through various types of retail establishments and other channels, including through the Internet. In addition, the company compete against many other companies that manufacture and sell more narrow beauty product lines sold through retail establishments and other channels, including through the Internet. 48 - 49 -The company also have many global branded and private label competitors in the accessories, apparel, housewares, and gift and decorative products industries, including retail establishments, principally department stores, mass merchandisers, gift shops and specialty retailers. The company's principal competition in the fashion jewelry industry consists of a few large companies and many small companies that sell fashion jewelry through department stores, mass merchandisers, specialty retailers and e-commerce. 50 - 51 -The company believe that the personalized customer service offered by the Representatives; the Representatives’ earnings opportunity as well as the amount and type of field incentives the company offer the Representatives on a market-by-market basis; the high quality, attractive designs and prices of its products; the high level of new and innovative products; its easily recognized brand name and its guarantee of product satisfaction are significant factors in helping to establish and maintain its competitive position. 52 - 53 -==== International Operations ==== 54 - 55 -During 2017, its international operations, outside of the U.S., were conducted primarily through subsidiaries in 56 countries and territories. Outside of the U.S., its products were also distributed in 17 other countries and territories. In March 2016, the company separated from its North America business, which had consisted of the Company's operations in the U.S., Canada and Puerto Rico; this business has been presented as discontinued operations for all periods presented. As a result, all of its consolidated revenue is derived from operations of subsidiaries outside of the U.S. During 2017, approximately 39% of its consolidated revenue was derived from South Latin America, approximately 38% was derived from Europe, Middle East & Africa, approximately 14% was derived from North Latin America and approximately 9% was derived from Asia Pacific. Further, approximately 22% of its consolidated revenue during 2017 was derived from Brazil, which is its largest market and is included within the South Latin America reportable segment. 56 - 57 -The company's international operations are subject to risks inherent in conducting business abroad, including, but not limited to, the risk of adverse foreign currency fluctuations, foreign currency remittance restrictions, the ability to procure products and unfavorable social, economic and political conditions. 58 - 59 -See the sections "Risk Factors - The company's ability to conduct business in its international markets may be affected by political, legal, tax and regulatory risks" and "Risk Factors - Avon Products is subject to financial risks as a result of its international operations, including exposure to foreign currency fluctuations and the impact of foreign currency restrictions" in Item 1A on pages 7 through 20 of its 2017 Annual Report for more information. 60 - 61 -==== Manufacturing and Sourcing ==== 62 - 63 -The company manufacture and package the majority of its Beauty products, which are formulated and designed by its staff of chemists, designers and artists. Raw materials, consisting chiefly of essential oils, chemicals, containers and packaging components required for its Beauty products are purchased from a range of third-party suppliers. The remainder of its Beauty products and all of its Fashion & Home products are purchased from various third-party manufacturers. 64 - 65 -The company's products are affected by the cost and availability of materials such as glass, plastics, chemicals and fabrics. For the vast majority of items Avon Products has more than one source of supply available. The company believe that the company can continue to obtain sufficient raw materials and supplies to manufacture and produce its Beauty products for the foreseeable future. 66 - 67 -Additionally, the company design the brochures that are used by the Representatives to sell its products. The brochures are then produced on its behalf by a range of printing suppliers. 68 - 69 -The loss of any one supplier would not have a material impact on its ability to source raw materials for the majority of its Beauty products or source products for the remainder of its Beauty products and all of its Fashion & Home products or paper for the brochures. 70 - 71 -==== Product Categories ==== 72 - 73 -Both of its product categories individually account for 10% or more of consolidated net sales in 2017. The following is the percentage of net sales by product category for the years ended December 31: 74 - 75 -|= |=2017|=2016|=2015 76 -|Beauty|75%|74%|74% 77 -|Fashion & Home|25%|26%|26% 78 - 79 -==== Trademarks and Patents ==== 80 - 81 -The company's business is not materially dependent on the existence of third-party patent, trademark or other third-party intellectual property rights, and Avon Products is not a party to any ongoing material licenses, franchises or concessions. The company do seek to protect its key proprietary technologies by aggressively pursuing comprehensive patent coverage in major markets. The company protect its Avon name and other major proprietary trademarks through registration of these trademarks in the relevant markets, monitoring the markets for infringement of such trademarks by others, and by taking appropriate steps to stop any infringing activities. 82 - 83 -==== Seasonal Nature of Business ==== 84 - 85 -The company's sales and earnings are typically affected by seasonal variations, a characteristic of many companies selling beauty, gift and decorative products, apparel and fashion jewelry. For instance, its sales are generally highest during the fourth quarter due to seasonal and holiday-related patterns. However, the sales volume of holiday gift items is, by its nature, difficult to forecast, and taken as a whole, seasonality does not have a material impact on its financial results. 86 - 87 -==== Research and Product Development Activities ==== 88 - 89 -New products are essential to growth in the highly competitive cosmetics industry. The company's research and development ("R&D") department’s efforts are important to developing new products, including formulating effective beauty treatments relevant to women’s needs, and redesigning or reformulating existing products. To increase its brand competitiveness, Avon Products has sustained its focus on new technology and product innovation to deliver first-to-market products that provide visible consumer benefits. 90 - 91 -The company's global R&D facility is located in Suffern, NY. A team of researchers and technicians apply the disciplines of science to the practical aspects of bringing products to market around the world. Relationships with dermatologists and other specialists enhance its ability to deliver new formulas and ingredients to market. Additionally, Avon Products has R&D facilities located in Argentina, Brazil, China, Mexico, the Philippines, Poland, South Africa and the United Kingdom. 92 - 93 -In 2017, its most significant product launches included: Anew Reversalist Infinite Effects Night Treatment Cream, Avon True Nutra Effects collection, Avon True Color Flawless Foundation, Mark Big & Style Mascara, Mark Liquid Lip Lacquer, Avon Care Oatmeal collection, Eve Duet, Luminata, Encanto Body Cream and Advanced Techniques Miracle Densifier. 94 - 95 -The amounts incurred on research activities relating to the development of new products and the improvement of existing products were $52.9 in 2017, $52.1 in 2016 and $61.9 in 2015. This research included the activities of product research and development and package design and development. Most of these activities were related to the design and development of Beauty products. 96 - 97 -==== Environmental Matters ==== 98 - 99 -Compliance with environmental laws and regulations impacting its global operations has not had, and currently is not anticipated to have, a material adverse effect on its financial position, capital expenditures or competitive position. 100 - 101 -==== Employees ==== 102 - 103 -At December 31, 2017, the company employed approximately 25,000 employees. Of these, approximately 500 were employed in the U.S. and approximately 24,500 were employed in other countries. 104 - 105 -==== Transformation Plan ==== 106 - 107 -In January 2016, the company announced a transformation plan (the "Transformation Plan"). See "Overview" within MD&A on pages 27 through 28 for more information on these items. 108 - 109 -==== Acquisitions and Dispositions ==== 110 - 111 -In December 2015, the company entered into definitive agreements with affiliates of Cerberus, which included the separation of the North America business from Avon into New Avon, a privately-held company that is majority-owned and managed by an affiliate of Cerberus. Avon retained approximately 20% ownership in New Avon. These transactions closed in March 2016. In July 2015, the company completed the sale of Liz Earle. Refer to Note 3, Discontinued Operations and Divestitures on pages F-19 through F-20 of its 2017 Annual Report, for additional information regarding the sales of the North America business and Liz Earle. 112 - 113 - 32 +Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua. Ut enim ad minim veniam, quis nostrud exercitation ullamco laboris nisi ut aliquip ex ea commodo consequat. Duis aute irure dolor in reprehenderit in voluptate velit esse cillum dolore eu fugiat nulla pariatur. Excepteur sint occaecat cupidatat non proident, sunt in culpa qui officia deserunt mollit anim id est laborum.