Avon 2011 Annual Report Download - page 21

consolidation covering our manufacturing, distribution and supply footprints, which may require significant resources and be challenging to
achieve, or if we are unable to successfully enhance our disaster recovery planning. The loss of, or damage to, any of our facilities or centers,
or that of our third party manufacturers could have a material adverse effect on our business, results of operations and financial condition.
Our success depends, in part, on the quality and safety of our products.
Our success depends, in part, on the quality and safety of our products, including the procedures we employ to detect the likelihood of
hazard, manufacturing issues and unforeseen product misuse. If our products are found to be, or are perceived to be, defective or unsafe, or
if they otherwise fail to meet our Representatives’ or end customers’ standards, our relationship with our Representatives or end customers
could suffer, we could need to recall some of our products, our reputation or the appeal of our brand could be diminished, and we could
lose market share and/or become subject to liability claims, any of which could result in a material adverse effect on our business, results of
operations and financial condition.
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.
Furthermore, material shifts or decreases in market demand for our products, including as a result of changes in consumer spending patterns
and preferences or incorrect forecasting of market demand, 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
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