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1
AGENDA
WelcomeAmy Greene, VP of Investor Relations
Open Up AvonJan Zijderveld, Chief Executive Officer
Rebooting Avon’s direct selling propositionMiguel Fernandez, Global President
Modernize Avon Jonathan Myers, Chief Operating Officer
Value creationJamie Wilson, Chief Financial Officer
2
Magdalena
Ferreira-LamasGM,
North Latin America
Matthieu ComardGM,
Western Europe
Angela CretuGM,
Central Europe
Louise ScottChief Scientific Officer
Closing remarks and Q&AJan Zijderveld, Chief Executive Officer
Forward-Looking Statements
3
This material contains “forward-looking statements” that are made pursuant to the safe harbor provisions of the Private
Securities Litigation Reform Act of 1995, including statements relating to revenue trends, cost savings, efforts to implement
new digital and e-commerce strategies, improved Representative engagement and service, product launches and commercial
and digital spend. Because forward-looking statements inherently involve risks and uncertainties, actual future results may
differ materially from those expressed or implied by such forward-looking statements. These risks and uncertainties include,
but are not limited to, the possibility of business disruption, competitive uncertainties, and general economic and business
conditions in Avon’s markets as well as the other risks detailed in Avon’s filings with the Securities and Exchange
Commission. Avon undertakes no obligation to update any statements in this material after it is posted to the Investor
Relations section of our website.
once content is final
4
OPEN UP AVON
Jan Zijderveld, Chief Executive Officer
5
6
Our Vision for Avon is grounded by our
Strong Purpose
Avon’s current performance is not a market issue…
7
Beauty
Direct selling
Emerging markets
Part-time economy
+5%
+4% 2014
- 2017
+7%
25%2014
- 2017
2014
- 2017
2014
- 2017
It’s an Avon problem …we made it too hard for Her
8
From: Locked In To: Opened Up
Limited training and toolsBargain selling
Internally focused, silo cultureLargely do things in-house
Printed brochures“Mail plan” ordering systemHand delivery
Open up culture...Fit for purpose structure
Trained for assisted sellingDigital, motivated beauty advisors
Cumbersome and closed Nimble and open
Avon is famousBut not aspirational
Avon - anywhere, anytimeOffline + onlineFlexible delivery options
Accessible on trend beauty brand
Avon must leverage its strengths
9
Global leader in
social selling
People selling to People
Strong global
beauty brand
Strong purpose at
its heart
A movement of six million
brand ambassadors
A community of women,
by women, for women98% brand awareness
Avon must change to go forwardWhat got us here, won’t get us there…
10
PushMake it easier for Her to earn money
Pull Accessible, on-trend beauty brand
Unlock digitalAnytime, anywhere
Re-energize our purpose Empower women
H1 2018
• Identified root causes
• Put the “Boss” back at the heart
• Fixing service
• Focused on big countries
• Re-energized the field
• Faster innovation
• Kicked off 10 ‘must-win battles’ MWB
• Ready Reset Grow conference
• Strengthened balance sheet
11
We have already accomplished a lot
Visited 10
markets
Doubled
innovation
speed
Global sales
organization
New key
country
general
managers
>60K calls to
Representatives
Ready Reset
Grow – 150
leaders
10 MWB /
sprint teams
$240M debt
repaid
Build new performance culture and inject new talent
H2 2018
• Training and incentives for Her
• Commit to e-commerce;
E-Brochure and My Avon store
• Turnkey innovation
• Open up to partners
• Fuel for growth
• Strengthen Avon brand
• Inject new talent
12
We continue to move quickly….
Build new performance culture
Train
500K…1M
200 new
products /
50% faster
Relaunch
brand
Target $400M
fuel for growth
over 3 years
$10M Training
for Her
Multiple new
top executives
Improve
pricing focus
E-brochures in
+ 40 markets
Change takes time
13
It’s early in the process of change for most of our key markets.
New management, improvements in service and changes take time to implement.
Russia
Brazil
UK
South Africa
Mexico
Philippines
Turkey Colombia
Central Europe
Argentina
Level of change
Improvement Progress
Transformation journey
1
2
3
Strategic
breakouts
Restore
competitiveness
Modernize
the core
Cultural
transformation
15
Restore competitiveness modernize the core
• Re-boot social selling
• Fix service
• Modernize the brand and stronger innovation
• Unlock digital and e-commerce
• Open up and simplify
• Fuel for growth
• Drive performance culture
• Inject new talent and closer to markets
15
Restore
Financial
Strength
Modernize
our model
and value
proposition
Perform
100%
as one team
Must win
battles
1
16
More accessReach more consumers
More opportunitiesGrowing categories, geographies and channels
More openNew partnerships and fit for purpose infrastructure
More value Increase Her earnings
2 Breakout strategiesto open up Avon
17
More accessOpen access to Avon to all consumers; anywhere, anyplace
DON’T KNOW AVON
KNOW AVON
BUY FROM THE BROCHURE
Avon brand is
bigger than its
sales
1818
Avon Representative E-Representative
1:10 customers
sells from brochure
hand delivers
1:1000 customers
online and offline
flexible delivery
digital business
More accessAvon: anywhere, anytime
19
Avon
Competitor 3
Competitor 2
Competitor 1
Brazil Mexico Russia
Accessible beauty
doesn’t have to mean cheap
Low price point: room to tier up
Over promoted: 98% sold on promotion
Don’t price for innovation
More value
20
Levers to create value
Bundles and regimes
Win in all price tiers
Train with intent
Innovate to price
Less promotion
More opportunities
21
Enter fast growth markets
On-trend
categories
Geographies
Avon4China
Channels
Representative
driven e-commerce
More open
22
Embrace an open eco-system versus doing everything in-house
New partnerships and alliances
Fit for purpose assetsand infrastructure
New talent and capabilities
Fuel for growth
23
Reset performance culture • Execution rigor
Closer to the markets
Speed and agility• Halve innovation and brochure cycles
• Start up mentality
New capabilities and talent• Reboot social selling
• Digital and e-commerce
Thinking differently
3 Cultural transformation
Critical elements to transform Avon
24
Fix the leaks
Modernize the core
Strategic breakouts
Cultural transformation
The journey will take time, sequencing and prioritizing
25
Rebooting Avon’s
direct selling proposition
Miguel Fernandez, Global President
Embrace the power of direct selling
26
Re-establishing a trusted relationship with six million brand ambassadors
Bring more people
Keep them longer
27
Avon’s growth steps
Step 1
Step 2
Step 3
Segment – targeted support
Increase Her earnings
Training and tools to enable more value
Step 0 Fix service (pre-requisite)
Step 4
Retain Her Step 5
Recruit more
28
Improving box and
product damage
Understand Her
expectations
Segmented
service models
Testing next day
delivery in main cities
Transitioning from
‘mail plan’ ordering
Products
availability improved
>60KCalls to
Representatives
99%Fill rate in beauty,
F&H needs work
96%
97%Received in
good condition
Service is fundamental
Continued improvement in service is key to Avon’s ability to increase retention
Data from top 14 markets as of Sept 7th 2018
1. Recruit with an attractive narrative
29
From To
Short-term focus Invitation to a journey
Weak financial proposition
Same size fits all treatment
1:1 - 5
Tailored messaging and support
Scaled recruiting10:500 – 1000
Meaningful financialproposition
Beauty bestsellers kit Advanced beauty kit Pro beauty kit
£35 £90 £165
UK targeted starter kits
30
Matching the initial investment and product to her intent
Beauty fan Part-time Full-time
Aligning tools with Her intent and expectations from her first day
2. Segment to provide targeted support
31
She will make this a full-time job. She will
be an entrepreneur and grow Her business Full-time
She will use
the digital tools
to develop
and grow Her
business
E-RepShe loves beauty and our products but not
necessarily interested in building a career Beauty
enthusiast
She wants part-time earnings while having
fun and gaining beauty expertisePart-time
3. Tailored compensation models around the world will deliver meaningful income to Her
From To
Complex, ineffective Simplified and straight forward
Short term incentive driven
Full-time focused
High turn over, short term
Centered around part-time
Realistic, long term retention
Valued opportunity and brand
4. Training with intent
33
Product information
Innovation Selling toolsBusiness
development
In Q4 alone we are planning to train over 1M Representatives
Bundles and regimes expected to dramatically increase price points and loyal customers
34
Bundles group logical products together and regimes solve for specific concerns
Bundles
Summer must-haves
Regimes
1. Tightens 2. Night cream 3. Day cream
The daily face lift - stop the clock
+ +
Changing Her role from administratorto a beauty advisor
35
Skin analyzer21-day makeover app and
digital toolsAnew wrinkle testing strips
Selling tools will help Her to engage longer with her customers and deliver results for them
Assisted sales tools helping Her provide greater value to Her customers
The power of purpose and belonging to something bigger than herself
5. Recognition and belonging
36
Avon foundation has raised over $1B for causes that matter most to women over the past four decades
Despite the size of the two markets and brand awareness,
together they account for less than $100m in annual sales.
Capturing our share of growth in key markets
37
India and China are enormous markets where Avonhas been under-represented
China
69% brand recognition
~1B people are aware
of the Avon brand
E-commerce and digital go to market
India56% brand recognition
More than 500M people are aware
of the Avon brand
Injecting talent with direct selling, local and transformational experience
38
Markets with new leadership account for
more than 50% of revenue
Brazil, Jose Vicente Marino Direct selling, local and transformation experience
Eastern Europe, Anna YarvitsStrong track record in Russia and business
transformation
Asia Pacific, Bill RahnSeasoned direct selling APAC executive
Western Europe, Matthieu ComardLocal and transformation experience
Italy and Mediterranean, Marco BrandoliniSignificant direct selling local experience
India, Dronacharya Chakraborty
Track record in driving growth in direct selling
New global sales organization
The path to growth begins with the Representative
Returning the excitement and desirability
to being an Avon Representative
39
Step 1
Step 2
Step 3
Segment – targeted support
Increase Her earnings
Training and tools to enable more value
Step 0 Fix service (pre-requisite)
Step 4
Retain Her Step 5
Recruit more
40
Modernize Avon
Jonathan Myers, Chief Operating Officer
Modernize Avon; disrupting our own business model
41
1 More relevant brand
2 Sharper portfolio
3 Digital and data transformation
4 Agile, lean and open eco-system
1. Modernize the Avon brand: improve relevance to broaden appeal
50% consideration
Eroding beauty
credentials weaken
purchase intent
98% awareness
Women know Avon
Opportunity:
More relevant,
contemporary brand to
rebuild customer base
Avon Market research : Women 15-64, Top 10 Markets, Nov 1742
Unleash the Avon brand-democratizing beauty
43
2. Sharper portfolio
44
Strengthen the core
Capture growing trends
Closer to the market
Continual work on core
product lines
Avon portfolio – sharper, faster
45
Building a strong ‘fast beauty’ brand
On trend innovation
Faster growth segments
All price tiers
On trend innovation: fast beauty
46
Changing how we work in-house and with partners to bring trend products faster
Lip Tattoo K-BeautyAnew Gold Ultimate mask
23 weeks
launched Europe and Brazil
23 weeks
global launch
22 weeks
first launch Eastern Europe
Local Mexican blogger
designed fragranceNaturals with local ingredients
Brazil Q4 18
47
On trend innovation:shifting resources closer to our consumers
16 weeks
Win in all price tiers
48
Skin care: good – better – best
$13.30
$4.60
$37.70
$2.50
H2 Launches
Win in all price tiers
49
Skin care: good – better – best
Win in all price tiers: launch bundles
50
Increase Representative earnings
Relevant seasonal gifting opportunities
Local seasonal
Tips and products needed for a particular ‘look’ –
delivered through your door
Trends and tips
Deliver product performance and build beauty credentials
Enhance benefits
51
Fuel Her earnings and provide enhanced consumer experience
Win in all price tiers: enable assisted selling model
Mission Y1. Premium ‘Regime’, premium pricing,
growing J-Beauty segment
2. Training, tools and techniques to
support assisted selling
3. Representatives ‘qualify’ to become
‘licensed to sell’
4. Launch Central Europe in 4Q
3. Game changer: leverage digital and data
52
Increase access, reduce effort, improve Her earnings
Delivering digital tools
Unlock e-commerce
Unleashing data and analytics
Unlock e-commerce
53
Expand Representative reach beyond the physical brochure
Avon sold and delivered – anytime, anywhere
My Avon Store E-brochure Digital marketing
New digital tools to support assisted selling
54
Example: 21 day makeover app
Measureyour skin tone
Determine foundation shade match
Choose harmonized lipstick shades
Virtual tryon selections
Unleashing the power of data and analytics
55
Become a data and analytics driven company
Data rich company fueled
by direct connect to 6M
Representatives
Up-sell and cross-sell
Leverage data for
segmentation and
personalization
Launching the digital transformationInvestment - $230m capex
56
Modernize core
systemsAnalytics
Digitize tools –
e-commerceDigital marketing
Talent and
capabilities
On-trend K Beauty
Russia 2H 2018Global and local
Delivering solutions
with partners
4. Open up Avon’s eco-system
57
More open – not doing everything ourselves
External innovation Digital transformationPartnerships
Open up assets and infrastructure
58
Optimizing manufacturing and distribution
Today Future
Complex business modelSimpler, more agile
business model
Multiple manufacturing and under utilized distribution facilities
Leaner, more agile network with more partners
Anytime, anywhere - improved service
Simpler processes and systems
Rigid delivery options and mixed service results
Too many SKUs, materials and suppliers
Fit for purpose infrastructure: potential of $300m savings
Optimize
manufacturing
footprint
Optimize
warehousing
footprint
Procurement
savings
Reducing
complexityReducing
stock
More 3rd parties
and improve
efficiencies
Double
utilization
Leverage
purchase power
and injecting talent
25% reduction in
SKUsReduce
by 15%
59
60
Value creationJamie Wilson,
Chief Financial Officer
Value creation
61
How will we fund it?
How much will we invest?
How much will we save?
Financing the future
How will we progress?
$400M in cost reductions to fuel growth
62
Manufacturing/sourcing
Distribution/OH
Back office efficiency
Interest & Tax
Manufacturing footprint optimization, right sizing, outsourcing and targeted sourcing efficiencies
Zero based redesign of back office functions, facilities, real estate, and other discretionary spend optimization
Distribution footprint rationalization, right sizing, outsourcing and targeted OH efficiencies
$400m
savingsOver 3 years
Over 3 years 2019 - 2021
Invest ~$300M to support growth initiatives
63
Commercial Spend
Digital & IT Infrastructure
Underpinned by ~$230M of Digital and IT Capex spend over 3 years
Reinvest in Representative training and recognition
Avon brand modernization
Restore core category competitiveness
New categories and markets
Modernized systems environment
Digital talent
Digital tools and analytics
~$300M
Over 3 years 2019 - 2021
Commercial & Digital
Investment
Cash generated
Incremental cash from operations (CFO)
64
Commercial and
digital investment
Incremental CFO net of
savings and reinvestments
Cash generated from
cost reductions
+$290m +$565m -$275m
Over 3 years 2019 - 2021
Cash from operations and savings exceeds cost of initiatives No need for additional financing
65
Potential CTI
(Cost to implement)
net of disposed assets
Incremental CFO net of
savings and reinvestments
Capex
Working capital
improvements
+$290m +$120m
-$130m-$230m
+$50mCash generation is
sufficient to cover
investment
Over 3 years 2019 - 2021
Reset
▪ Restore basics
▪ Talent injection
▪ New performance
culture
Stabilize
▪ Stabilize revenue
▪ Slight margin
improvement
Accelerate
▪ Low single digit
revenue growth
▪ Low double digit
margin
Avon, big value creation opportunity to be unlockedBut, it will take time
66
2018 2019 2020 2021
Momentum
▪ Mid single digit
revenue growth
▪ Mid double digit
margin
Future
67
Closing remarks
Jan ZijderveldChief Executive Officer
Critical elements to transform AvonThe journey will take time, sequencing and prioritizing along the way
Hi-impact
Hi-touch Hi-tech
Hi-access
68
Fix the leaks
Modernize the core
Strategic breakouts
Cultural transformation
6M Representatives
30M Brochures
100M consumers
Hand delivery
98% on promo
69
VALUE
ACCESS
Open Up Avon
70
VALUE
ACCESS
6M Representatives
30M Brochures
100M consumers
Hand delivery
98% on promo
Hi-impact
Hi-touch Hi-tech
Hi-access
We are building a new Avon…
71
Our vision:
The digital
social selling
beauty company
The company for women
• Changing lives of our beauty entrepreneurs
• Democratizing beauty for our consumers
72