Avon 2014 Annual Report Download - page 4

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We’ve now largely stabilized our top markets and believe we are well-positioned to continue our progress
toward sustainable, profitable growth.
In 2014, we improved adjusted operating margin by 40 basis points year-on-year, even with a negative
headwind of about 220 basis points due to currency. In constant dollars, we delivered flat revenue
performance year-on-year, and total Beauty sales were also flat. Active Representatives were down 5%.
Average order increased 5%.
We continued to improve our cost structure and achieved our cost savings target of $400 million that
we established in late 2012. While these savings have been offset in part by currency and inflation,
it’s very good progress. Given the stiff headwinds we’re facing, continuing to reduce structural cost
remains a key priority for us.
Throughout the course of 2014, the organization was focused on improving the two core operational
processes of our business—field management and commercial marketing. The improvements we made
in these areas were crucial to put Avon in a position to grow.
In 2014, we solidified our category strategies and saw sequential Beauty category improvement in the
second half of the year. We made good strides in commercial marketing with improved product offerings
across our base business in core categories, such as skincare and fragrance. In fact, in skincare, we
grew in the second half of the year. This is the first time that we’ve had consecutive quarter growth in
skincare since 2008. This reflects a strengthened base business coupled with strong innovation in our
top markets.
Regarding field management, we’ve shown improvement; however, this will remain our key focus in 2015.
We know that to drive Representative engagement, we need to improve the Representative experience,
which will ultimately impact the number of Active Representatives. Put simply, we need to make the Avon
experience so compelling that a woman chooses to join us, has the confidence to recommend Avon
products to her family and friends, and wants to remain with us.
In 2014, we also improved consumer access to Avon. Today, in most of our major markets, Representatives
and their customers can access the Avon brochure through their mobile phones and tablets, and we
will continue to roll out and upgrade our mobile apps throughout 2015. We also successfully re-launched
Avon.com in the U.S., giving our Representatives access to a more contemporary social-selling
experience for her and her customers.
We also completed strategic alliances in Latin America with Coty and KORRES. The products from these
alliances are important additions to our portfolio and will enable us to bring more consumers into Avon.
And importantly, during 2014, we finalized our agreement with the U.S. Government related to the
FCPA matter.