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Avon Looking to Right Its Ship as Q3 2012 Revenue Decreases 8%
Posted: November 1, 2012
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For Europe, the Middle East and Africa, revenue dropped 11% from Q3 2011 to $620.7 million. Third-quarter constant-dollar revenue declined due to lower average order, partially offset by an increase in active representatives. The revenue decline was impacted by approximately two points due to a benefit from a value added tax settlement in the U.K. in the prior-year period. Russia was down 9%, or up 1% in constant dollars, due to higher average order partially offset by a decline in active representatives, and the U.K. was down 25%, or down 23% in constant dollars. Revenue in the U.K. was negatively impacted by approximately 12 points due to the benefit of the VAT settlement in the prior-year period that did not recur in 2012. The decline was also due to lower average order and a decrease in active representatives. Turkey was up 9%, or up 14% in constant dollars, primarily due to growth in active representatives, while South Africa was down 14%, or up 2% in constant dollars, primarily due to growth in active representatives.
For North America, revenue for the third quarter 2012 was down 8% to $443.6 million. The North America Avon business (which excludes Silpada) was down due to a decline in active representatives, partially offset by higher average order due to stronger performance in fashion and home and representative mix. Silpada sales declined 25% due to a decline in average order as well as a decline in active representatives.
For Asia Pacific, revenue was also down 8% to $215.7 million, as third-quarter constant-dollar revenue decreased due to a decline in active representatives, partially offset by higher average order. The decline in the region's active representatives was primarily due to China, where it has become apparent that Avon’s business is predominantly retail. The company no longer includes as representatives those individuals who place their orders through retail locations. Revenue in China declined 31% on both a reported and constant-dollar basis due to ongoing business challenges in that market, and the Philippines grew 6%, or 4% in constant dollars, primarily due to growth in active representatives.