Avon 2011 Annual Report Download - page 4

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By far our most critical priority is to accelerate top-line revenue growth. In 2011,
we saw strong direct-selling performances in a number of key markets, most
notably Mexico, where we delivered double-digit growth and gained share against
our competitors. Our focus now is on driving similar success in our other top
markets. In the U.S., for example, we are seeing some early encouraging signs of
progress, with gains in mass market Beauty share this last fourth quarter for the
first time in three years.
Continuing to grow our world-famous Avon Beauty brand also remains a
critical priority to drive revenue growth. The Avon name is recognized by 90%
of consumers in major markets around the world and is consistently listed as one
of the world’s top 100 consumer brands. We are a world leader in mass fragrance
and sell four lipsticks every second somewhere in the world. In 2012, our
emphasis will be on smart value and mass Beauty. This will be supported by
selective, major Beauty innovations similar to the successful introduction of
ANEW Genics in 2011, which is now tracking to become one of the largest skin care
launches in Avon’s history.
Our commitment to reignite revenue growth is coupled with an equally urgent
focus on reducing costs, which have increased in recent years as we continue to
face wage and commodity inflation as well as pressures from foreign exchange.
As part of the long-range business review, we are taking a comprehensive look at
our entire cost base. We have identified some near term cost-cutting opportunities
and we are moving against these very quickly. These include headcount reductions
to eliminate duplicative work and streamline processes, as well as significant
opportunities to reduce indirect spending across the organization. Improving cash
flow is another priority. We are focusing on improving working capital with a
particular emphasis on reducing inventories over time.
We are also committed to ensuring that we have the requisite management and
leadership capabilities that will enable our future success. In line with this, we have
named some of our strongest internal direct-selling leaders to head each of our
priority geographies. They are supported by a number of strategic external hires.
For example, this past fall, we were pleased that Kimberly Ross joined Avon as
Executive Vice President and Chief Financial Officer. Kimberly joined us from Royal
Ahold, where she served as Executive Vice President and CFO for this $40 billion
Netherlands-based international group. Many of the business challenges Kimberly
successfully dealt with at Royal Ahold have application to Avon.