netrashetty
Netra Shetty
Avon (NYSE:AVP) makes beauty and personal care products, including various types of cosmetics - lipstick, eyeliner, mascara, basically anything that would make a wonderful Mother's Day gift - apparel and accessories, and home and decoractive products. Avon's products face intense competition, from companies like Estee Lauder Companies (EL) and Revlon (REV), in all of its markets from both global and regional mid-end brand personal care products. To combat competition and improve brand recognition in US and global markets, Avon launched a Turn-around Plan in 2005 that included strategic initiatives to reduce costs, increased advertising spending, improve product quality, and improve sales profitability. The company expects an annualized savings of $430 million when the plan is completely implemented in 2011-2012 as well as improved market share and increased sales performance. [1]
While the majority of Avon's competitors distribute their products to resellers such as department stores, drugstores, or cosmetic stores, Avon sells its products solely through its direct-selling channel of independently-contracted Active Sales Representatives and through its online website. [2] However, the company's direct-selling business model is at risk for incurring more costs due to Representative dissatisfaction and global legal restrictions. In 2004, four Avon Representatives filed a class-action lawsuit against Avon, charging AVP for charging Representatives unfairly for products and refusing refunds of unsold products. [3] In 1998, China banned direct-selling and did not reinstate Avon's license for direct-selling until 2006, resulting in large revenue losses for Avon as it could not longer use its main business model in the Chinese market during this time. [4] Due to the company's reliance on its direct-selling business model, earning potential and satisfaction of its Representatives and maintaining its business model are essential for the company's success in global markets.
Contents
1 Company Overview
1.1 Business Segments
1.1.1 Beauty (72.0% of net sales)
1.1.2 Fashion (17.0% of net sales)
1.1.3 Home (11.0% of net sales)
1.2 Emerging Markets
1.3 Avon Acquires Silpada
1.4 Avon Sells Japanese Operations[9]
2 Business Growth
2.1 FY 2009 (ended December 31, 2009)[10]
2.2 Q1 FY 2010 (ended March 31, 2010)[11]
2.3 Q2 FY 2010 (ended June 30, 2010)[12]
2.4 Q3 FY 2010 (ended September 30, 2010)[13]
2.5 Q4 FY 2010 (ended December 31, 2010)[14]
3 Trends and Forces
3.1 Direct-Selling Model Dependent on Earnings from Active Sales Representatives
3.2 Multi-year Cost Restructuring Initiative May be Unable to Reduce Costs and Support Increased Advertising
3.3 Direct-Selling Business Model Exposed to Regulations in the Global Market
3.4 Large Presence in Global Market Exposes AVP to Currency Fluctuation Risks
4 Competition
5 References
Company Overview
Avon produces and sells consumer packaged goods worldwide through its direct selling boutique store channel and its online channel.
Business Segments
Avon's revenues come from three main categories:[5][6]
Beauty (72.0% of net sales)
cosmetics, fragrances, and personal care products. In FY2009, sales of this segment fell 2.6% compared to sales in 2008.
Fashion (17.0% of net sales)
jewelry, watches, apparel and accessories. In FY2009, sales of this segment fell 5.1% compared to sales in 2008.
Home (11.0% of net sales)
Home products and decorative products. In FY2009, sales of this segment fell 1.2% compared to sales in 2008.
Emerging Markets
Avon continued to expand its business worldwide in FY2009, especially in emerging markets such as Brazil, China, Colombia, Russia, Turkey, and Venezuela, aiming for high market share and brand recognition in these markets. The only positive regional revenue growth that the company had were in the Latin America and China at 5.6% and 0.7%.[7]
Avon Acquires Silpada
On July 12, 2010, Avon announced that it was acquiring Silpada Designs in an effort to expand its jewelry business. Silpada is a direct seller of sterling silver jewelry in the U.S., Canada and the U.K. Silpada makes more expensive jewelry than Avon, with prices ranging from $12 to $279, with an average of $64. Avon is acquiring Silpada for $650 million and says that Silpada will continue to operate as a standalone business with its existing 32,000 independent sales representative.[8]
Avon Sells Japanese Operations[9]
In early November 2010, Avon announced that it was selling 75% of its operations in Japan to TPG Capital for $90 million. Avon is looking to focus more on emerging markets that have high growth potential -- Avon Japan contributed about 2% of the company's total sales. The company doesn't expected the sale to have a material impact on financial statements. TPG Capital also released a counter offer to buy the remaining shares of Avon Japan.
Business Growth
FY 2009 (ended December 31, 2009)[10]
AVP's net income fell 29%, from $875 million in FY2008 to $625 million in FY2009. The significant decline in net earnings was due to weak international sales (due to foreign exchange pressures) and declining operating profit.
Total revenue was $10.4 billion in FY2009, down 3% from total revenue of the prior-year quarter. However, on a local-currency bases, total revenues actually increased 6% as foreign exchange pressured growth down by 9%. The decline came despite a 9% increase in active representatives. Overall international sales were down, with the hardest hit segment being Central and Eastern Europe where revenues fell 13%. Domestically, sales in North America fell 9% for the year. In addition, all of Avon's product categories had negative sales growth.
Operating profit for FY2009 was $1.02 billion, and operating margin was 9.8% of net sales. This is a 270 bps decrease from the previous year, during which operating margin was 12.5%. The decrease in profit margins was due to a 1.4% increase in SG&A expenses.
International sales fueled Avon in 2009 as more than 80% of consolidated revenue came from overseas. Sales in Latin America, which totaled $4.1 billion, were the highest for the company. In second were sales in North America which totaled $2.3 billion.
Q1 FY 2010 (ended March 31, 2010)[11]
Avon's net income was $43 million, a 64% decrease from Q1 FY 2009 net income of $117 million. The decrease was mainly caused by AVP's effective tax rate being a 66.1% due to the devaluation of Venezuelan currency. Excluding this negative impact, net income was actually $144 million.
Total revenue increased 14% to $2.5 billion. The number of active representatives grew by 6% as the recessionary environment attracted many unemployed people to Avon's independent selling business strategy. Additionally, the company's Beauty segment grew by 14%.
Avon had mixed sales results internationally, as it had a 2% sales decline in North America, a 22% sales increase in Latin America, a 31% sales decrease in China, a 28% sales increase in Eastern Europe, and a 23% sales increase in Western Europe and Africa.
The company spent $96 million on advertising -- a 23% increase from the same quarter last year.
Q2 FY 2010 (ended June 30, 2010)[12]
The company's Net Income was $167.6 million more than double the year-ago quarter value of $82.9 million.
Net sales rose 8% to $2.68 billion. Sales in all of the company's product categories increased with 16% growth in perfume and 12% growth in color cosmetics.
Avon increased advertising in the quarter to $97 million, up 19% from the prior year quarter. The company increased advertising mainly in Latin America.
Geographically, Avon's revenue increased 16% in Latin America from strength in Brazil and Mexico. Sales in North America remained flat.
Q3 FY 2010 (ended September 30, 2010)[13]
Avon's Net income in the third quarter of 2010 increased 7% to $167 million. The increase was short of what many analysts had expected as the company had higher costs due to advertising and weak sales from large markets like China and Brazil.
Net Revenue increased 4% to $2.66 billion, compared to $2.56 billion in the prior year quarter. The company benefited from higher sales in Latin America (8% growth) and Western Europe, the Middle East, and Africa (11% growth). However, sales in North America remained stagnant with a 2% decline in growth and sales in China fell by 30% as Avon tries to transition away from retail stores in the region in favor of a direct selling method that it uses in its other markets.
Advertising costs increased 36% as the company promoted its fragrances as well as its two new product categories hair and acne.
Q4 FY 2010 (ended December 31, 2010)[14]
Avon's fourth quarter net income fell 15% to $229.5 million. The company blamed weak seals in Brazil, China, and Russia, and higher costs for resins, chemicals, freight, and labor. To offset these higher costs, the company planes to raise prices in FY 2011.
Avon's net revenue increased 1.3% to $3.18 billion which was mostly due to price increases due to higher costs. Sales in Latin America, Avon's largest business region, increased 5% to $1.27 billion. Sales in North America increased 1% to $644.4 million. Revenue fell 45% in China as the company tries to implement its direct-selling business method in the country that reversed a law banning it in 2005.
Trends and Forces
Direct-Selling Model Dependent on Earnings from Active Sales Representatives
In both domestic and global markets, Avon's sales largely come from direct selling through its Active Sales Representatives. The 6.2 million Representatives that Avon employs are independent contractors that receive a percentage commission for their sales but do not enjoy employee benefits. [15] The idea behind the direct-selling model is that if Avon can eliminate the middle-man (department and cosmetic stores) and get its products directly to consumers, they will be able to cut costs and increase profits. One of the goals of the 2005 Turn-around Plan to increase the number of Representatives paid off in 2007 when the company had a 13% increase in net sales as a result of the increase in the number of Representatives. [16]
Due to its reliance on direct-selling through representatives, Avon not only competes for the end consumer but also for representatives that are knowledgeable about the industry and about beauty products. Avon's dependence on the productivity and profitability of the representative direct-selling model exposes it to cost and litigation risks. In 2004, four Avon representatives filed a class action lawsuit against the company for alleged "channel stuffing," where Avon supposedly shipped products representatives without an order and held representatives responsible for payment for the unordered shipments. It is likely that AVP will incur future costs through litigation and resolution of the lawsuit, which may include terms that would increase costs and decrease profits for Avon. [3]
Multi-year Cost Restructuring Initiative May be Unable to Reduce Costs and Support Increased Advertising
In late 2005, Avon launched a Turn-around plan that included several strategic initiatives to realign costs, improve products, and increase market share through brand competitiveness. Avon expects annualized savings of more than $430 million when the plan is fully implemented in 2011-2012. However, with the global economic downturn and slowing demand for non-essential personal care products, Avon may not be able to achieve its savings target. For example, Avon has dropped its prices so far that at the end of Q2 2009, 70% of its products were prices less than $5.[17] Falling short of its savings targets would be detrimental to Avon's profitability as it would not longer be able to support its increased advertising spending. In 2009, Avon decreased advertising costs by 10% [18] which was in contrast to the 48% increase in 2007 and 83% increase in 2006 - a sign that the company was cutting back due to the economic downturn. to support new product launches and improve brand recognition as part of the turn-around plan. Although Avon does not want to reduce advertising spending, which means success of the turn-around plan is vital to supporting Avon's increased advertising costs as well as costs incurred by the company's entry and expansion in new global markets, the economic downturn has forced the company to cut back on advertising. In Q1 2009, Avon's focused shifted from advertising to recruiting more sales representatives - the number of representatives increased by 7% during the quarter. [19] However, the company plans to further cut costs by cutting 1,200 jobs, or about 2.8 percent of its global workforce, by 2013.[17] At the end of 2009, the company revised its turn-around plan and now hopes to save $200 by 2011-2012.
Direct-Selling Business Model Exposed to Regulations in the Global Market
Avon has become synonymous with the direct-selling business model - the process by which the company hires independent contractors, called Active Sales Representatives, and pays them percentage of commission to sell Avon prodcuts directly to customers. By removing the need for a middle distrubutor, such as a department or cosmetic store, Avon hopes to eliminate costs and increase profits. In 1998, the Chinese government banned direct-selling in response to abuses perpetrated by some corporations. The company's business in the region was crippled in the short-term and strongly disadvantaged in the long-term as the company was forced to abandon its direct-selling strategy and had to open its own retail stores in order to sell products. [20] Not until 2006 did China re-licensed Avon for direct-selling, which allowed Avon's revenues from China to increase rapidly from 2006 to 2008. Total revenue from China rose from $212 million in 2006 to $353 million in 2009.[7] Similar situations may arise in Avon's other emerging market segments, which would negatively impact Avon's revenue growth globally. [4]
Large Presence in Global Market Exposes AVP to Currency Fluctuation Risks
80% of Avon's sales revenues come from markets outside of the United States, making the company very sensitive to currency fluctuations and the strength of the dollar.[7]A weakening of the dollar against foreign currencies would allow Avon products to become more competitively priced in global markets, thus positively affecting sales revenue from foreign markets; however, a weak dollar would also mean higher costs for products manufactured overseas. For example, in 2009 the unfavorable impact of foreign exchange lowered operating margin by an estimated 2.5 points and lowered total revenues by 9 percentage points. [21][22] In Q1 FY 2010, for example, AVP had a 64% decrease in net income compared to Q1 FY 2009 due to the devaluation of Venezuelan currency, despite total revenue increasing 14%.[23]
Competition
As a retailer of personal care products, AVP faces intense competition from other mid-end personal care product retailers. Most of its competitors use a reseller model and distribute its products to retail stores such as Walgreens, Wal-mart, Macy's, etc., while others also sells products through the direct-selling channels. Almost all competitors also advertise and sell products through an online channel.
Major Competitors
L'oreal (LRLCY) - is a global cosmetics company that makes products for skin care, hair care, hair coloring, make-up, and styling products.
Estee Lauder Companies (EL) - makes skin care, makeup, fragrance and hair care products.
Revlon (REV) - makes cosmetics, women’s hair color, beauty tools, fragrances, skincare, anti-perspirants/deodorants and personal care products.
Bare Escentuals (BARE) - makes cosmetics, skin care and body care products.
Elizabeth Arden (RDEN) - makes fragrance, skin care and cosmetics products.
While the majority of Avon's competitors distribute their products to resellers such as department stores, drugstores, or cosmetic stores, Avon sells its products solely through its direct-selling channel of independently-contracted Active Sales Representatives and through its online website. [2] However, the company's direct-selling business model is at risk for incurring more costs due to Representative dissatisfaction and global legal restrictions. In 2004, four Avon Representatives filed a class-action lawsuit against Avon, charging AVP for charging Representatives unfairly for products and refusing refunds of unsold products. [3] In 1998, China banned direct-selling and did not reinstate Avon's license for direct-selling until 2006, resulting in large revenue losses for Avon as it could not longer use its main business model in the Chinese market during this time. [4] Due to the company's reliance on its direct-selling business model, earning potential and satisfaction of its Representatives and maintaining its business model are essential for the company's success in global markets.
Contents
1 Company Overview
1.1 Business Segments
1.1.1 Beauty (72.0% of net sales)
1.1.2 Fashion (17.0% of net sales)
1.1.3 Home (11.0% of net sales)
1.2 Emerging Markets
1.3 Avon Acquires Silpada
1.4 Avon Sells Japanese Operations[9]
2 Business Growth
2.1 FY 2009 (ended December 31, 2009)[10]
2.2 Q1 FY 2010 (ended March 31, 2010)[11]
2.3 Q2 FY 2010 (ended June 30, 2010)[12]
2.4 Q3 FY 2010 (ended September 30, 2010)[13]
2.5 Q4 FY 2010 (ended December 31, 2010)[14]
3 Trends and Forces
3.1 Direct-Selling Model Dependent on Earnings from Active Sales Representatives
3.2 Multi-year Cost Restructuring Initiative May be Unable to Reduce Costs and Support Increased Advertising
3.3 Direct-Selling Business Model Exposed to Regulations in the Global Market
3.4 Large Presence in Global Market Exposes AVP to Currency Fluctuation Risks
4 Competition
5 References
Company Overview
Avon produces and sells consumer packaged goods worldwide through its direct selling boutique store channel and its online channel.
Business Segments
Avon's revenues come from three main categories:[5][6]
Beauty (72.0% of net sales)
cosmetics, fragrances, and personal care products. In FY2009, sales of this segment fell 2.6% compared to sales in 2008.
Fashion (17.0% of net sales)
jewelry, watches, apparel and accessories. In FY2009, sales of this segment fell 5.1% compared to sales in 2008.
Home (11.0% of net sales)
Home products and decorative products. In FY2009, sales of this segment fell 1.2% compared to sales in 2008.
Emerging Markets
Avon continued to expand its business worldwide in FY2009, especially in emerging markets such as Brazil, China, Colombia, Russia, Turkey, and Venezuela, aiming for high market share and brand recognition in these markets. The only positive regional revenue growth that the company had were in the Latin America and China at 5.6% and 0.7%.[7]
Avon Acquires Silpada
On July 12, 2010, Avon announced that it was acquiring Silpada Designs in an effort to expand its jewelry business. Silpada is a direct seller of sterling silver jewelry in the U.S., Canada and the U.K. Silpada makes more expensive jewelry than Avon, with prices ranging from $12 to $279, with an average of $64. Avon is acquiring Silpada for $650 million and says that Silpada will continue to operate as a standalone business with its existing 32,000 independent sales representative.[8]
Avon Sells Japanese Operations[9]
In early November 2010, Avon announced that it was selling 75% of its operations in Japan to TPG Capital for $90 million. Avon is looking to focus more on emerging markets that have high growth potential -- Avon Japan contributed about 2% of the company's total sales. The company doesn't expected the sale to have a material impact on financial statements. TPG Capital also released a counter offer to buy the remaining shares of Avon Japan.
Business Growth
FY 2009 (ended December 31, 2009)[10]
AVP's net income fell 29%, from $875 million in FY2008 to $625 million in FY2009. The significant decline in net earnings was due to weak international sales (due to foreign exchange pressures) and declining operating profit.
Total revenue was $10.4 billion in FY2009, down 3% from total revenue of the prior-year quarter. However, on a local-currency bases, total revenues actually increased 6% as foreign exchange pressured growth down by 9%. The decline came despite a 9% increase in active representatives. Overall international sales were down, with the hardest hit segment being Central and Eastern Europe where revenues fell 13%. Domestically, sales in North America fell 9% for the year. In addition, all of Avon's product categories had negative sales growth.
Operating profit for FY2009 was $1.02 billion, and operating margin was 9.8% of net sales. This is a 270 bps decrease from the previous year, during which operating margin was 12.5%. The decrease in profit margins was due to a 1.4% increase in SG&A expenses.
International sales fueled Avon in 2009 as more than 80% of consolidated revenue came from overseas. Sales in Latin America, which totaled $4.1 billion, were the highest for the company. In second were sales in North America which totaled $2.3 billion.
Q1 FY 2010 (ended March 31, 2010)[11]
Avon's net income was $43 million, a 64% decrease from Q1 FY 2009 net income of $117 million. The decrease was mainly caused by AVP's effective tax rate being a 66.1% due to the devaluation of Venezuelan currency. Excluding this negative impact, net income was actually $144 million.
Total revenue increased 14% to $2.5 billion. The number of active representatives grew by 6% as the recessionary environment attracted many unemployed people to Avon's independent selling business strategy. Additionally, the company's Beauty segment grew by 14%.
Avon had mixed sales results internationally, as it had a 2% sales decline in North America, a 22% sales increase in Latin America, a 31% sales decrease in China, a 28% sales increase in Eastern Europe, and a 23% sales increase in Western Europe and Africa.
The company spent $96 million on advertising -- a 23% increase from the same quarter last year.
Q2 FY 2010 (ended June 30, 2010)[12]
The company's Net Income was $167.6 million more than double the year-ago quarter value of $82.9 million.
Net sales rose 8% to $2.68 billion. Sales in all of the company's product categories increased with 16% growth in perfume and 12% growth in color cosmetics.
Avon increased advertising in the quarter to $97 million, up 19% from the prior year quarter. The company increased advertising mainly in Latin America.
Geographically, Avon's revenue increased 16% in Latin America from strength in Brazil and Mexico. Sales in North America remained flat.
Q3 FY 2010 (ended September 30, 2010)[13]
Avon's Net income in the third quarter of 2010 increased 7% to $167 million. The increase was short of what many analysts had expected as the company had higher costs due to advertising and weak sales from large markets like China and Brazil.
Net Revenue increased 4% to $2.66 billion, compared to $2.56 billion in the prior year quarter. The company benefited from higher sales in Latin America (8% growth) and Western Europe, the Middle East, and Africa (11% growth). However, sales in North America remained stagnant with a 2% decline in growth and sales in China fell by 30% as Avon tries to transition away from retail stores in the region in favor of a direct selling method that it uses in its other markets.
Advertising costs increased 36% as the company promoted its fragrances as well as its two new product categories hair and acne.
Q4 FY 2010 (ended December 31, 2010)[14]
Avon's fourth quarter net income fell 15% to $229.5 million. The company blamed weak seals in Brazil, China, and Russia, and higher costs for resins, chemicals, freight, and labor. To offset these higher costs, the company planes to raise prices in FY 2011.
Avon's net revenue increased 1.3% to $3.18 billion which was mostly due to price increases due to higher costs. Sales in Latin America, Avon's largest business region, increased 5% to $1.27 billion. Sales in North America increased 1% to $644.4 million. Revenue fell 45% in China as the company tries to implement its direct-selling business method in the country that reversed a law banning it in 2005.
Trends and Forces
Direct-Selling Model Dependent on Earnings from Active Sales Representatives
In both domestic and global markets, Avon's sales largely come from direct selling through its Active Sales Representatives. The 6.2 million Representatives that Avon employs are independent contractors that receive a percentage commission for their sales but do not enjoy employee benefits. [15] The idea behind the direct-selling model is that if Avon can eliminate the middle-man (department and cosmetic stores) and get its products directly to consumers, they will be able to cut costs and increase profits. One of the goals of the 2005 Turn-around Plan to increase the number of Representatives paid off in 2007 when the company had a 13% increase in net sales as a result of the increase in the number of Representatives. [16]
Due to its reliance on direct-selling through representatives, Avon not only competes for the end consumer but also for representatives that are knowledgeable about the industry and about beauty products. Avon's dependence on the productivity and profitability of the representative direct-selling model exposes it to cost and litigation risks. In 2004, four Avon representatives filed a class action lawsuit against the company for alleged "channel stuffing," where Avon supposedly shipped products representatives without an order and held representatives responsible for payment for the unordered shipments. It is likely that AVP will incur future costs through litigation and resolution of the lawsuit, which may include terms that would increase costs and decrease profits for Avon. [3]
Multi-year Cost Restructuring Initiative May be Unable to Reduce Costs and Support Increased Advertising
In late 2005, Avon launched a Turn-around plan that included several strategic initiatives to realign costs, improve products, and increase market share through brand competitiveness. Avon expects annualized savings of more than $430 million when the plan is fully implemented in 2011-2012. However, with the global economic downturn and slowing demand for non-essential personal care products, Avon may not be able to achieve its savings target. For example, Avon has dropped its prices so far that at the end of Q2 2009, 70% of its products were prices less than $5.[17] Falling short of its savings targets would be detrimental to Avon's profitability as it would not longer be able to support its increased advertising spending. In 2009, Avon decreased advertising costs by 10% [18] which was in contrast to the 48% increase in 2007 and 83% increase in 2006 - a sign that the company was cutting back due to the economic downturn. to support new product launches and improve brand recognition as part of the turn-around plan. Although Avon does not want to reduce advertising spending, which means success of the turn-around plan is vital to supporting Avon's increased advertising costs as well as costs incurred by the company's entry and expansion in new global markets, the economic downturn has forced the company to cut back on advertising. In Q1 2009, Avon's focused shifted from advertising to recruiting more sales representatives - the number of representatives increased by 7% during the quarter. [19] However, the company plans to further cut costs by cutting 1,200 jobs, or about 2.8 percent of its global workforce, by 2013.[17] At the end of 2009, the company revised its turn-around plan and now hopes to save $200 by 2011-2012.
Direct-Selling Business Model Exposed to Regulations in the Global Market
Avon has become synonymous with the direct-selling business model - the process by which the company hires independent contractors, called Active Sales Representatives, and pays them percentage of commission to sell Avon prodcuts directly to customers. By removing the need for a middle distrubutor, such as a department or cosmetic store, Avon hopes to eliminate costs and increase profits. In 1998, the Chinese government banned direct-selling in response to abuses perpetrated by some corporations. The company's business in the region was crippled in the short-term and strongly disadvantaged in the long-term as the company was forced to abandon its direct-selling strategy and had to open its own retail stores in order to sell products. [20] Not until 2006 did China re-licensed Avon for direct-selling, which allowed Avon's revenues from China to increase rapidly from 2006 to 2008. Total revenue from China rose from $212 million in 2006 to $353 million in 2009.[7] Similar situations may arise in Avon's other emerging market segments, which would negatively impact Avon's revenue growth globally. [4]
Large Presence in Global Market Exposes AVP to Currency Fluctuation Risks
80% of Avon's sales revenues come from markets outside of the United States, making the company very sensitive to currency fluctuations and the strength of the dollar.[7]A weakening of the dollar against foreign currencies would allow Avon products to become more competitively priced in global markets, thus positively affecting sales revenue from foreign markets; however, a weak dollar would also mean higher costs for products manufactured overseas. For example, in 2009 the unfavorable impact of foreign exchange lowered operating margin by an estimated 2.5 points and lowered total revenues by 9 percentage points. [21][22] In Q1 FY 2010, for example, AVP had a 64% decrease in net income compared to Q1 FY 2009 due to the devaluation of Venezuelan currency, despite total revenue increasing 14%.[23]
Competition
As a retailer of personal care products, AVP faces intense competition from other mid-end personal care product retailers. Most of its competitors use a reseller model and distribute its products to retail stores such as Walgreens, Wal-mart, Macy's, etc., while others also sells products through the direct-selling channels. Almost all competitors also advertise and sell products through an online channel.
Major Competitors
L'oreal (LRLCY) - is a global cosmetics company that makes products for skin care, hair care, hair coloring, make-up, and styling products.
Estee Lauder Companies (EL) - makes skin care, makeup, fragrance and hair care products.
Revlon (REV) - makes cosmetics, women’s hair color, beauty tools, fragrances, skincare, anti-perspirants/deodorants and personal care products.
Bare Escentuals (BARE) - makes cosmetics, skin care and body care products.
Elizabeth Arden (RDEN) - makes fragrance, skin care and cosmetics products.