Avon Products Inc. (API) has filed for Chapter 11 bankruptcy protection at the US Bankruptcy Court of the District of Delaware, has announced Natura &Co, the owner of the company since 2020.
API is a U.S.-based non-operational holding company that is responsible for the Avon brand outside the United States, Canada, Puerto Rico. Natura &Co said the financial restructuring procedure is restricted to the holding and that no impacts are expected on the brand’s operations.
In the documents submitted to the bankruptcy court, API mentions pandemic pressures and scores of lawsuits alleging its talc-based products caused cancer among the reasons explaining its financial difficulties.
"We remain focused on advancing our business strategy internationally, including modernizing our direct selling model and reigniting the brand to accelerate growth," said Kristof Neirynck, Chief Executive Officer of Avon in a statement.
It is important to note that The Avon Company, which is the Avon brand owner in the United States, Canada and Puerto Rico and a leading direct seller of beauty products, is not affected by the recent developments concerning API. The Avon Company is currently owned by LG Household & Health Care Ltd. and is not affiliated with any other Avon entity.
In a separate statement, Natura &Co also reported financial results for the second quarter of 2024 (Q2-24), showing improved revenue trends while margins continued to expand, especially in Hispanic countries where the second wave of the integration of Natura and Avon in the region was implemented. This positive performance, however, continued to be impacted by the ongoing sales deleverage at Avon International, which encompasses all global markets except Latin America.
"Natura &Co’s revenue was back in positive territory, driven by strong results in Q2-24 at Natura &Co Latam, partially offset by still challenging figures at Avon International, while margin continued to expand. This is an important sign that our strategy is effective. We also started to see a better trend in top-line dynamics, reflecting not only a strong performance by the Natura brand with Brazil and Mexico accelerating vs. Q1-24, but also the significant recovery by Avon CFT in Brazil. The integration of the brands in Latin America continues to advance and has proven to be the main driver of our profitability, both in this and in recent quarters. We believe in the potential of the Avon brand and fully support the measure adopted by API (…)," explained Fábio Barbosa, CEO of Natura &Co Group.
