Avon Products Inc.

A Financial Analysis of Avon Products Inc. Doris Frasier SEMT01 Financial Fundamentals for Managers FIN-351 Dean Unrue February 24, 2011

Avon Products Inc.

Outline I. II. Executive Summary History  Company History  Description of Industry  Competitors  Product and Core Competencies III. Company Financial Review  Financial Statements  Analysis of Balance Sheet, Income Statement and Cash Flow  Ratio and Economic Analysis  Annual Report and Organizational Events IV. Conclusions  Future Prospects  Recommendation for Future Improvements

Avon Products Inc.

Executive Summary One of the most unique phenomenon that emerged from the American pioneering spirit is Avon Products Inc.. Its founder, David H. McConnell, a door-to-door book salesman offered women a rarity in 19th Century America: a chance to become financially independent. This paper will explain the strategies used by Mr. McConnell to take a struggling door-to-door book selling business and turn it into one of the worlds most enduring and iconic images of womens entrepreneurship. The history section of the paper will showcase how through high economic times, depressions, world wars and other crises The California Perfume Company evolved to become Avon Products Inc. which is first in sales nationwide and has representatives worldwide. It will also discuss how Avon has helped to shape the cosmetics and fragrance industries. It will explain how Avons products now encompasses several other industries including apparel, lingerie and now even the hair extension industry. It will also compare Avon to its closest competitors, LOreal, Revlon and Mary Kay. In the financial review section emphasis will be placed on the financial records of Avon. These will include the Annual Reports which contains the Income Statement, Balance Sheet and Analysis of Cash Flow. Economic and Ratio analysis will also be given. Reports of sale, income, stock prices movement and other pertinent financial information will be given as well In the conclusion Avons outlook for the future will be discussed. I will then, as a current Avon representative, give a few recommendations of things that I think will help improve the company in the future. There are a few things that I have noticed that could be changed to make handling your personal operation easier.

Avon Products Inc.

The History of Avon Products Inc. In 1886 it was practically unheard of for a woman to run her own business. Women were mainly confined to the home as housewives or to agricultural, domestic service or manufacturing jobs. Only about 20% of the women in the United States worked outside the home and their wages were a fraction of those for men who did the same work. The vision of a book salesman changed that. For some women, this son of an Irish immigrant would alter their lives forever. David H. McConnell, a visionary leader, would become a pioneer in empowering women. He would offer them the opportunity to create and manage their own businesses. Mr. McConnell was a struggling door-to-door book salesman. In an attempt to bolster his lagging book sales, he came up with the idea to offer perfume samples to the housewives that were his customers. He blended these fragrances with the assistance of a pharmacist. He soon began to realize that the women were more interested in his perfume samples than his books. This led to his giving up book sales and starting a new company. During his travels Mr. McConnell saw many untrained women that were left to their own resources. Some of these women even had families to support. He knew that with a little help and some training, these women could do better for themselves. So, with the assistance of his wife Lucy, who also had splendid ideas and good business sense, he started the California Perfume Company. Their idea was to develop a plan for a company to better serve his customers as well as give profitable employment to women.

Avon Products Inc.

Appendix B Avon Products, Inc. Income Statement 2008 -2010 Year ends December 31 Net Sales Other Revenue Total Revenue Cost of Gods Sold Gross Profit SG&A Expenses Dep. & Ammor. Operating Profit Interest Expense Interest Income Other expenses,net Total other expenses Income before taxes Income Taxes Net Income Earnings per share Basic Dilute Dividend per share 2010 $10,862.8 98.1 10,960.9 4,041.3 6,919.6 5,748.4 194.8 1,073.1 112.2 (42.2) 6.6 76.6 996.5 350.2 646.3 2009 $10,284.7 101.2 10,385.9 3,888.3 6,497.6 5,476.3 180.7 1,018.2 104.8 (20.2) 7.1 91.7 926.5 298.3 6 28.2 2008 $10,588.9 93.5 10,682.4 3,949.1 6,733.3 5,401.7 187.2 1,339.3 100.4 (37.1) 37.7 101.0 1,238.3 362.7 875.6

1.39 1.39 .88

1.45 1.45 .84

2.04 2.03 .80