Avon 2010 Annual Report Download - page 25

Our success depends, in part, on our key personnel.
Our success depends, in part, on our ability to retain our key personnel, including our executive officers and senior management team. The
unexpected loss of one or more of our key employees could adversely affect our business. Our success also depends, in part, on our
continuing ability to identify, hire, train and retain other highly qualified personnel. Competition for these employees can be intense. We
may not be able to attract, assimilate or retain qualified personnel in the future, and our failure to do so could adversely affect our business.
This risk may be exacerbated by the uncertainties associated with the implementation of our multi-year restructuring plan.
Our ability to anticipate and respond to market trends and changes in consumer preferences
could affect our financial results.
Our continued success depends on our ability to anticipate, gauge and react in a timely and effective manner to changes in consumer
spending patterns and preferences for beauty and related products. We must continually work to develop, produce and market new
products, maintain and enhance the recognition of our brands, achieve a favorable mix of products, and refine our approach as to how and
where we market and sell our products. While we devote considerable effort and resources to shape, analyze and respond to consumer
preferences, consumer spending patterns and preferences cannot be predicted with certainty and can change rapidly. If we are unable to
anticipate and respond to trends in the market for beauty and related products and changing consumer demands, our financial results will
suffer. This risk may be exacerbated by our PLS program, which is leading to significant changes to our product offerings.
Furthermore, material shifts or decreases in market demand for our products, including as a result of changes in consumer spending patterns
and preferences, could result in us carrying inventory that cannot be sold at anticipated prices or increased product returns by our
Representatives. Failure to maintain proper inventory levels or increased product returns by our Representatives could result in a material
adverse effect on our business, results of operations and financial condition.
If we are unable to protect our intellectual property rights, specifically patents and
trademarks, our ability to compete could be negatively impacted.
The market for our products depends to a significant extent upon the value associated with our product innovations and our brand equity.
We own the material patents and trademarks used in connection with the marketing and distribution of our major products both in the U.S.
and in other countries where such products are principally sold. Although most of our material intellectual property is registered in the U.S.
and in certain foreign countries in which we operate, there can be no assurance with respect to the rights associated with such intellectual
property in those countries. In addition, the laws of certain foreign countries, including many emerging markets, such as China, may not
protect our intellectual property rights to the same extent as the laws of the U.S. The costs required to protect our patents and trademarks
may be substantial.
We are involved, and may become involved in the future, in legal proceedings that, if
adversely adjudicated or settled, could adversely affect our financial results.
We are and may, in the future, become party to litigation. In general, litigation claims can be expensive and time consuming to bring or
defend against and could result in settlements or damages that could significantly affect financial results. We are currently vigorously
contesting certain of these litigation claims. However, it is not possible to predict the final resolution of the litigation to which we currently
are or may in the future become party to, and the impact of certain of these matters on our business, results of operations and financial
condition could be material.
Government reviews, inquiries, investigations, and actions could harm our
business or reputation.
As we operate in various locations around the world, our operations in certain countries are subject to significant governmental scrutiny and
may be harmed by the results of such scrutiny. The regulatory environment with regard to direct-selling in emerging and developing markets
where we do business is evolving, and officials in such locations often exercise broad discretion in deciding how to interpret and apply
applicable regulations. From time to time, we may receive formal and informal inquiries from various government regulatory authorities
about our business and compliance with local laws and regulations. Any determination that our operations or activities, or the activities of
our Representatives, are not in compliance with existing laws or regulations could result in the imposition of substantial fines, interruptions
of business, loss of supplier, vendor or other third party relationships, termination of necessary licenses and permits, or similar results, all of
which could potentially harm our business and/or reputation. Even if an inquiry does not result in these types of determinations, it potentially
could create negative publicity which could harm our business and/or reputation.
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