Avon 2012 Annual Report Download - page 5

connection between our brand and consumers.
They are trusted partners – driving campaign energy
and serving as ambassadors for our products
in every corner of the world. Our responsibility is
to enable our Representatives to succeed in
their businesses. We have the opportunity to use
technology to support our Representatives – by
better connecting them with their customers and
making it easier to do business with Avon. We also
need to ensure that Avon’s earnings opportunity,
rewards and recognition are competitive.
Optimizing Geographies entails defi ning the role
that each market plays in our business, prioritizing
energy and resources in those key markets and,
when appropriate, exiting underperforming markets.
Avon has a strong geographic footprint, with
approximately 70% of our business today coming
from developing markets. The majority of projected
growth in the global Beauty industry is expected to
be generated in developing markets over the next
few years, therefore Avon is well positioned.
DRIVING SIMPLIFICATION
AND EFFICIENCY
To support sustainable growth, we also need to
drive simplifi cation and effi ciency and get costs
out of our business. In addition to identifying
opportunities to reduce short-term costs, we are
looking for ways to simplify our business model
for the long-term, improve our processes and
increase discipline, and modernize our Information
Technology systems.
As we take steps to simplify the business, we
will include a careful evaluation in our top markets
of our campaign cycle, the complexity of the sales
model approach, and the need to right-size our
product line. On the back-end, we are working to
streamline fi nancial reporting, simplify our systems,
streamline the innovation process, and standardize
components and materials.
By 2016, we also intend to invest an incremental
$150–200 million in Information Technology capital
expenditures to retire and transform legacy systems,
improve supply chain processes and improve the
overall Representative experience.
IMPROVING ORGANIZATIONAL
EFFECTIVENESS
I fi rmly believe that people drive results. Restoring
our Associates’ pride in Avon and creating an
environment where each Associate has clear
priorities and is engaged in our common objectives
are critical. We will also continue to improve the
organization’s effectiveness by setting the tone
at the top, upgrading talent in key positions
and building a robust talent pipeline. This is a
management-intensive business and we need
to have strong leadership and a deep bench in
each of our key markets.
Working as One Team, One Avon, we are
implementing a shared set of behaviors that guide
how we work together. These behaviors are
incorporated into our new talent development,
performance management and compensation
programs, and will help ensure that we maintain
focus on our priority activities and set distractions
aside. Of course, through all of this, we remain true
to Avon’s core values: Respect, Belief, Humility,
Integrity and Trust.
Our current situation did not develop overnight, and
it will take time for us to complete our turnaround.
But, looking ahead, I am very confi dent that we
will return Avon to growth. We have more than six
million active, independent Avon Representatives who
believe in Avon and want us to succeed. We have an
enviable geographic footprint and an enduring brand.
The Beauty and Direct Selling industries are both
strong, and continue to grow. And ‘word of mouth’ –
the hallmark of Avon’s business model – remains the
most infl uential driver of purchase intent.
We enter 2013 with a great sense of urgency to
restore our business and a commitment to deliver
results. And with the support of our Representatives
and Associates, I am confi dent we will succeed.
Sheri McCoy
Chief Executive Offi cer
March 2013