Avon Goes Bankrupt in US, What About Its Nicaraguan Sellers?
The Avon Products company has filed for bankruptcy in the US. This is what we know about its international sales in countries such as Nicaragua.
HAVANA TIMES – After learning of the Avon Company’s financial problems in the United States and their recent filing for bankruptcy, local representatives such as Ninoska in Managua wonder what will happen with the company’s local sales in Nicaragua. Ninoska began selling these products while studying in the university, and although she now works for an export company, she still supplements her income with the private sale of these cosmetics.
It’s not that I earn a lot, but I also save by not having to purchase these products for personal use,” she says.
Veronica is another entrepreneur who sells several brands of perfumes that she buys from companies inside and outside Nicaragua. She explains that the Avon products are affordable, so she offers them to those with lower incomes, “so as not to let the money slip away.” Some of her customers can pay on credit for perfumes with a unit cost of more than $200, but others can’t.
Robust international trade
What we know so far is that Cerberus Capital remains the brand’s holding company outside the United States. That company has specified that Avon’s operations outside the United States, “are not part of the bankrupcy proceedings,” and that Avon’s international markets continue functioning normally.
Between 2016 and 2020, the Avon cosmetics industry split into two separate entities: The Avon Company, currently owned by LG Household & Health Products; and Avon Products, owned by the Brazilian beauty company Natura. While Avon Products has filed for bankruptcy, The Avon Company, which is the Avon brand currently owned by LG Household & Health Care, is not affiliated with this entity and is not part of the Chapter 11 proceedings,” company spokespersons clarified.
Despite the current challenges, Kristof Neirynck, current Avon Company CEO, stressed that the company continues to focus on advancing their commercial strategy internationally, including the modernization of the direct sales model and relaunching the brand to accelerate growth.
Natura’s losses grew 29.6% in the first half of 2024
On August 13, the Brazilian beauty products manufacturer Natura reported losses of some 327 million dollars in the first half of 2024, an increase of 29.6% in the losses posted for the same period in 2023 the company informed.
The manufacturer attributed the increased losses to the accounting adjustments resulting from the financial problems that on August 12th led the US subsidiary of Avon Products to file for bankruptcy in the United States.
Natura clarified in its statement that, despite this result, revenues continued to increase thanks to “strong sales dynamics at Natura Brazil” and the stabilization of Avon Brazil, which was not included in the financial restructuring process.
Natura’s sales in the first half of 2024 totaled around 2.5 billion dollars, up by a slight margin of 0.1% compared to the first six months of last year.
However, while the sales of Natura’s Latin American subsidiary rose by 2.9 %, those of Avon International fell by 9.4%.
In the second trimester alone, Natura’s revenues increased by 14.8% while Avon’s were down only 0.8 %, well below the drop of -11.3% suffered in the first trimester.
The company’s Ebtida (earnings before interest, taxes, depreciation, and amortization) increased 9.3% to approximately US $270.5 million dollars in the first semester, thanks to an 11.6% increase corresponding to the Latin American division of Natura & Co. On the other hand, the Ebtida of Avon International fell 31.7%.
Fabio Barbosa, Natura’s CEO, issued a statement announcing the group’s support for the decision of Avon Products Inc.: “the US-based non-operational subsidiary acquired by Natura when it acquired the Avon group in 2020” to file for Chapter 11 bankruptcy in the United States.
According to Barbosa, the process for resolving the company’ debts and preexisting liabilities will allow them to return “more solid and more sustainable.”
“Natura & Co, as the largest creditor of Avon Products Inc., supports that reorganization and considers the decision an important step in the simplification journey they began a few years ago,” affirmed the executive, who clarified that Natura doesn’t foresee any impact on the company’s operations outside the United States.
With information from 100% Noticias and EFE.