Disclaimer...Disclaimer Forward-Looking Statements and Non-GAAP Financial Information Statements in...
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Disclaimer
Forward-Looking Statements and Non-GAAP Financial Information
Statements in this presentation that are not historical facts may be "forward-looking statements" within the meaning of the federal securities laws that involve potential
events, risks and uncertainties that could cause actual results to differ materially. Words such as “projects,” “estimates,” “forecasts,” “believes,” “intends,” “expects,”
“anticipates,” and similar expressions (including their negative counterparts) are intended to identify many of these forward-looking statements. Such forward-looking
statements are based upon information currently available to management and management's perception thereof as of the date hereof. The events, risks and
uncertainties relating to these forward-looking statements are detailed from time to time in reports filed by Avon Products, Inc. with the Securities and Exchange
Commission, including Forms 8‐K, 10‐Q, and 10‐K. Some forward‐looking statements in this presentation include and concern our outlook and performance, cost and
cost savings, competitive advantages, various strategies and initiatives (including our transformation plan), strategic partnerships and transactions, and organization
and structure. These forward‐looking statements involve risks, uncertainties and other factors, which may cause the actual results, levels of activity, performance or
achievement of Avon to be materially different from any future results expressed or implied by such forward‐looking statements. These risks and uncertainties include,
but are not limited to, our ability to improve our financial and operational performance, the possibility of business disruption, competitive uncertainties and general
economic and business conditions in our markets, including fluctuations in foreign currency exchange rates. Any forward‐looking statements speak only as of the date
they are made.
Forward-looking statements are not, and should not be relied upon as, a guarantee of future performance or results, nor will they necessarily prove to be accurate
indications of the times at or by which any such performance or results will be achieved. As a result, actual outcomes and results may differ materially from those
expressed in forward-looking statements. The Company does not undertake to update any such forward‐looking statements to reflect future events or developments.
This presentation contains certain non-GAAP financial measures. A “non-GAAP financial measure” is defined as a numerical measure of a company's financial
performance that excludes or includes amounts so as to be different than the most directly comparable measure calculated and presented in accordance with GAAP
in the statement of income, balance sheet or statement of cash flows of the company. Avon has provided in the appendix to this presentation a reconciliation of non-
GAAP financial measures to the most directly comparable GAAP financial measures. Please see the appendix at the end of this presentation for a reconciliation of
certain non-GAAP financial measures included in this presentation.
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CEO Avon Products, Inc.
Presented At Barclay's
September 6, 20163
Strengthen Avon’s position
as a leader in beauty,
unleash the power of the Avon
network, and
introduce a new
generation of women to a
brand we know they will love.
4
5
6
We are the world’s #1 Direct Selling Beauty
Company
$6 billion in net sales
6 million active Representatives
Sales operations in 57 countries and territories,
with distribution in 15 more countries
We sell 2.7 billion units annually, fulfilling
104 million orders
Our Top 10 markets account for nearly
70% of revenues
Avon at-a-glance
North LatinAmerica$0.9Bn
15%
Europe Middle East
Africa$2.2Bn
38%
Asia Pacific$0.6Bn
10%
South LatinAmerica$2.1Bn
36%
Revenue by Region LTM 6/30/16
Avon proudly stands for Beauty, Innovation, Optimism, and above all for Women
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Growing categories and industry
Beauty & Personal Care categories:
Reached $426Bn in annual sales globally in 2015
Grown for 15+ consecutive years
Continues to grow steadily at 5% annually
Direct Selling industry:
Reached $131Bn in sales in 2015
Has grown at 5% annually for the last five years
Beauty is the #1 Direct Selling category
8
Leadership in Key Markets and Categories
Top 10 Markets
Avon holds strong Market Share positions globally
All channels(retail & direct selling)
Brazil Mexico Russia Colombia Argentina Turkey South AfricaPolandUK
#2 #1 #1#1#2 #1 #1#1#1Direct Selling #1
Philippines
2133 3 4 235+Skin Care 1 22
1 35+ 1 32 33Color Cosmetics 1
3 2 132 1 2 25+1Fragrance
1
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Fashion & Home26% of Portfolio
by Sales
Compelling Product Portfolio
Beauty 74% of Portfolio by Sales
Key
Products
Category Skincare Fragrance Color
Sample
Products
Key
Brands
Upper Mass
Mass
Value
Fashion Jewelry
Watches
Apparel & Footwear
Housewares
Children’s(including Personal Care)
10
8 Million RepresentativesThe Largest Direct Selling Force in the World
Avon added over 10 million
Representatives in 2015
In our Top 10 Markets
over half of all new
appointments in 2015
were under 35 years old
More women join each year A strong tenured base
70%
60%
50%
40%
30%
20%
10%
0%
< 4 Months ~ ~ 5 to 18 Months > 18 Months
% o
f S
ale
s
Representative Tenure
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12
Creating Shareholder Value
Cerberus Partnership
Catalyst for change
Improve Operational Discipline & Execution
SeparateNA business
Unlock Valuein International Growth Markets
c
Transformation Plan
Disciplined execution
Invest in Growth
Improve Financial Resilience
Drive out Cost
13
Three-Year Transformation Plan
2015 2016 2017 2018Description
$350MM
Drive out Cost
Improve Operating Model
Drive Sourcing Initiatives
Optimize Supply Chain Network
Primary Focus to Fuel Growth
Improve Financial Resilience
Cerberus Investment
Dividend Suspension
Opportunistically Repay Debt
Tax Planning
Strengthen Balance SheetContinued Focus to
Fund Transformation
Media Investments & Social
Selling Implementation
Invest in Growth
Invest in our Brand & Beauty
Categories
Improve Representative Engagement
Bring Social Selling to Scale IT & Service Model Evolution
$150MM
$200MM
Focus Builds into 2017
$70MM in 2016
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Invest in our Brand & Beauty
Categories
Improve Representative
Engagement
Bring Social Selling to Scale
15
Invest in Brand & Beauty
Strengthen the Avon brand
Continue to build innovative pipeline
Grow our top 40 Brands
Execute disciplined pricing
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Strengthen the Avon Brand
Build brand relevance
and affinity with
Develop engaging content
to tell the Avon Story
Increase media investment and
shift more focus
to Digital
16% growth
in total global social media
reach in just 6 months!
105 Million Video Views
Instagram is Avon’s fastest growing
network with 53% growth with
nearly 1 Million followers
Avon is the #3 Beauty Brandon Facebook with 18.7M fans
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Invest in Growth – Innovation pipeline
We are investing across our three Beauty Categories
Color Skincare Fragrance
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NEW Perfectly Matte Lipstick100% true matte look with lasting comfort
BUILT 100% MATTE FROM START TO FINISHLightweight formula never cakes, cracks or compromises
INNOVATION Top Performer
Color
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A uniquely positioned fragrance
that drives the cues of real
magnetism
Specially constructed olfactives
to generate attraction
Testing conducted with real life
couples that proves it works!
“Avon Attraction
made me feel more
attractive” “Avon Attraction
made me feel sexy
and spontaneous”
INNOVATION Top Performer
Fragrance
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A joint force against signs of aging
Aging skin
Oil supplements skin’s natural lipids
& strengthen moisture barrier to help
improve skin’s outer structure
Serum with Celluvive acts within skin cells,
to stimulate cellular purification, to help improve
the signs of aging
Healthy young skin
VS
INNOVATION Skincare
3Q-4Q16
launch
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We are investing in our Innovation Pipeline
Existing Product
Development
Big breakthrough
innovation ideas
Sustained Support
for Top Performers
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VIDEO PLAYS HERE
Avon Big Define
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VIDEO PLAYS HERE
Avon Encanto
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Grow our Strongest Brands
40 Brands account for 80% of Revenue
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Invest in Growth
Build brands
across
3 tiers to meet
consumer
needs
Upper Mass
Mass
Value
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Strong Pipeline –Innovation for the Color Loyalist
Avon True
THERE CAN’T BE BEAUTY
WITHOUT TRUTH.
Only through true beauty can
women be truly empowered.
93% of women
believe that beauty companies
deliberately overpromise
what their products do.
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Strong Pipeline – Innovation for the Color Enthusiast
mark.
BIG & CUSTOM-EYESthe most versatile mascara
EVER!
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Invest in Growth – Disciplined Pricing
Price through innovation and mixIncreased Revenue
Advertising
Activation
Price Up
Superior Products
Price strategically
Price to inflation
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r
Improve Representative Engagement
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Ending Representatives
Quarterly YoY Growth (%)
-1%
0%
1%
2%
3%
Q3'14 Q4'14 Q1'15 Q2'15 Q3'15 Q4'15 Q1'16 Q2'16
Trending Up
Six quarters of Improvement
in Ending Representatives
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She needs…
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Top Market Focus
33
Driving strong MX results vs prior year:
Revenue growth +7.5%
Average order +2.5%
Ending Representatives +1.2%
Onboarding to drive retention
Example: Mexico
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Segmentation and Support
2.0X Minimum Wage
for Each Hour
Invested
Part-Time Earnings15 hours per week
provides meaningful
supplemental income
Full-Time Income 25 hours per week
provides median income
Wealth Creation40 hours per week
provides 2-3x median
income
Casual Sellers and “Junior” Leaders
Top Sellers and Leaders
Top Leadership Roles
Tim
e S
pe
nt
on
Avo
n B
us
ine
ss
Earnings Potential from Avon
Products at a
Discount
“Customer” Representatives
Stronger earnings link directly to higher retention and greater life-time value
Progression Based Upon Ambition and Time Commitment
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Service
Avon’s Service Model Evolution Framework
Representative and Customer-facing Processes Avon Back End Processes
Representative
Engagement
“Anywhere
Ordering
Channel
“Anytime”
Order
Submission
Payment
& Credit
Customer
Care
Order
Capture
Order
Fulfilment
“Anyplace”
Order
Delivery
Product
Returns
Delivering Anytime, Anywhere, Anyplace service to our Representative and her customers
Top markets will have completed evolution over the next three years. Representative and customer-facing improvements come first.
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Invest In Growth – Social Selling
Bring Social Selling to Scale
1886
Door-to-Door
1902
Door-to-Door
Telephone
1948
Door-to-Door
Telephone
TV
1984
Door-to-Door
Telephone
TV
Cell Phone
2005
Door-to-Door
Telephone
TV
Cell Phone
Social Media
2007
Door-to-Door
Telephone
TV
Cell Phone
Social Media
Smartphone
TODAY
Door-to-Door
Telephone
TV
Cell Phone
Social Media
Smartphone
Customer Analytics
# c
onta
cts
in h
er
netw
ork
Individual Clout
37
COO, CFOAvon Products, Inc.
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Avon’s Revenue and Adjusted Operating Profit
Historical Financial Performance – Total AVP
Ad
juste
d O
pera
ting P
rofit
Reve
nu
es
Revenues increased in constant currency,
driven by Top 10 markets, partially offset by
other markets
This growth was significantly impacted by F/X,
resulting in declines on a floating currency basis
C$ F$
Top 10 Markets +2.2% (13.4%)
Other Markets (2.0%) (17.6%)
Total AVP +0.7% (14.9%)
Revenue and Adjusted Operating Profit
(F$MM)
Highlights
Revenue CAGR (2013 – 2015)
8,497
7,648
6,161 5,784
774714
352 311
-
200
400
600
800
1,000
1,200
1,400
-
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
9,000
2013 2014 2015 LTM Q2'16
Revenue Adjusted Operating Profit
= Constant Currency Revenue year over year Growth by Reportable Segment (C$2016 rates).
(0%) +2% +3%
(10%)
(19%)
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Avon’s Q2 2016 Performance Update
Historical Financial Performance – Total AVP
Q2 2016 Highlights
$1,565$1,434
$99 $105
Q2 '15 Q2 '16
Revenue Adjusted Operating Profit
(8%)
+5%
Revenue and Adjusted Operating Profit
(Q2 2016 vs. Q2 2015 – in F$MM)
Q2 2016 AVP Revenue andAdjusted Operating Profit (F$MM)
= Constant Currency Revenue year over year Growth by Reportable Segment (C$2016 rates).
C$ revenue increased 5% year over year, excluding the
divestiture of Liz Earle
Total revenue from reportable segments increased 5%
in constant dollars, driven by:
− Active Representatives: +1%
− Average Order: +4%
− Ending Representatives: +2%
F$ Adjusted Operating Profit increased slightly year over
year as the Transformation Plan begins to take hold
despite the F/X headwinds
F$ Adjusted Operating Profit margin expanded
nearly100 basis points, from 6.3% to 7.3%
Free cash flow outlook raised to an estimated $50 - $75
million for FY 2016
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6%6%
Other Currencies
88%
38%
36%
15%
10%1%
Based on recent trends, we expect the impact of F/X to decrease
Historical Financial Performance – F/X Impact
$110
$135
$110 $105
$135
$100
$70
Q4 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016
Quarterly YoY F/X Impact on Adjusted Operating Profit (F$MM)
79.2
70
85
100
Dec-14 Dec-15
Weighted Average Top 10 Markets F/X RatesIndex = 100; base = December 31, 2014
US (USD)
WeightedAverage Top 10currencies
(21%)
4%
SOLA
NOLA
APACOther
EMEA
~10% of AVP revenues are in GBP and Euros (~30% of EMEA)
Revenue by Currency
Euro MarketsU.K.
Currency trends appear to be stabilizing in Q2 2016… …Resulting in lower year over year F/X loss
We have limited exposure to Euros and GBP
Revenue by Region
99.3
86
93
100
107
6/22 6/26 6/30 7/4 7/8 7/12 7/16 7/20 7/24 7/28
Top 10 Markets F/X RatesIndex = 100; base = Day before Brexit (6/22)
Top 10
Markets
As a result, Brexit did not affect our mix of currencies
June-16
41
Extended Maturity Profile and Maintain Substantial Liquidity
318282
450500
250
400
500
2016 2017 2018 2019 2020 2021 2022 2023 2043
Debt Maturities ($MM)
Senior Unsecured Notes Secured Revolving Credit Facility ($400MM)
Senior Secured Notes
Highlights of Recent Transactions
Issued $500 million secured first lien
notes due 2022 at a coupon of 7.875%.
Recent tender resulted in approximately
$300 million of bonds being retired.
These two financing transactions
resulted in a modest extension
of our maturity profile.
We continue to evaluate strategies to use
approximately $450 million in cash left to
spend on debt reduction and improving
the maturity profile.
Maturity pre tender offer
500
500
350
400
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What to Expect Near Term
Key Priorities Status
Sale and separation North America business Closed March 1st
Improved performance in top 10 markets 9 of Top 10 markets grew in Q2
1-2% Active Representative growth On track
Invest in the brand Beauty for a Purpose positioning at a local level
Pricing discipline Pricing flow through in Q2 quarter in Average Order
Evolve our Service Model On track
IT infrastructure to HPE On track
$70 million in cost savings in 2016 Identified all cost savings and execution on track
Resolution for our China business Stabilize China business, evaluating strategic alternatives
Improve our balance sheet On going
AccomplishedProgress Made
Ongoing Work
Not yet
Accomplished
43
Our Long-Term Financial Goals
Metrics Long-Term Financial Goals
Revenue Growth Mid single-digit C$ revenue growth
Representative Growth Low single-digit Active Representative growth
Adjusted Operating Margin Low double-digit adjusted operating margin
44
…To Drive Long Term, Sustainable Growth
Leadership Positions in Key International Markets
and Beauty Categories
Attractive Industry and Distribution Model
Iconic, Purpose-Driven Beauty Brand
Innovative Products Fueled by Strong R&D Capabilities
Unparalleled and Growing Representative Base
Transformation Plan Underway to Drive Profitable
Growth and Improved Financial Performance
45