Presented At

CEO Avon Products, Inc.

January 10, 2017
2

Welcome to Avon
Name

Title

Years of
Experience

Relevant Experience
CEO of Avon since April 2012

CEO

34 years

Former Vice Chairman of Johnson & Johnsons Executive Committee

and Worldwide Chairman of Johnson& Johnsons Pharmaceutical Group

Education: B.S., University of Massachusetts, Dartmouth, M.S., Princeton

University, MBA, Rutgers University

Sheri McCoy

CFO of Avon since January 2017

EVP, CFO

35 years

Former CFO of SABMiller and Main Board Director

of SABMiller PLC
Education: LLB, University of Edinburgh Law School

Jamie Wilson

COO of Avon since January 2016; former CFO of Avon

from March 2015 to December 2016;

EVP, COO
Jim Scully
3

28 years

Former CFO and COO of J. Crew

Former EVP Human Resources & Strategic Planning at Saks Inc.
Education: B.A., Siena College

Avon at-a-glance
Revenue by Segment1

LTM 9/30/16

Our Top 10 markets account for nearly 70% of revenues2

We are the worlds #1 Direct Selling

Beauty Company

$6 billion in net sales2

6 million Active Representatives;
8 million Ending Representatives
Sales operations in 57 countries
and territories, with distribution in
15 more countries

North Latin
America
$0.9B
15%
South Latin
America
$2.1B
36%

Europe
Middle East
Africa
$2.2B
38%

Asia
Pacific
$0.6B
10%

Avon proudly stands for Beauty, Innovation, Optimism, and above all for Women
Source: Euromonitor International Ltd.; Company financials and filings.
1. Percentages do not add to 100% as regional revenues exclude revenue from other operating segments and business activities, and due to rounding.
2. Based on rounded LTM September 30, 2016 revenues.

Attractive and Growing Industry

Beauty & Personal Care industry:

Reached $426B in annual sales globally in 2015

Continues to grow steadily at 5% annually

Direct Selling industry:

Reached $131B in sales in 2015
5% growth annually for the last five years

Beauty is the #1 Direct Selling category

Leadership Positions in Key Markets and Categories

Top 10 Markets
Brazil

Mexico

Russia

Philippines

UK

Argentina

Colombia

Turkey

Poland

South Africa

All channels
(retail & direct selling)

Color Cosmetics

5+

Skin Care

5+

Fragrance

5+

Direct Selling

#2

#1

#1

#1

#1

#1

#2

#1

#1

#1

Avon holds strong Market Share positions globally

Source: Euromonitor International Ltd. - Represents 2015 data

Compelling Product Portfolio

Beauty (75% of Revenue)

Fashion & Home

Category

Skincare
(including Personal Care)

Key
Products

Upper Mass
Mass
Value
Note: Figures based on LTM September 30, 2016.
Source: Company website, Company filings, and other publicly available information.

Color

Sample
Products

Key
Brands

Fragrance

Fashion Jewelry
Watches
Apparel & Footwear
Housewares
Childrens

8 Million Representatives
The Largest Direct Selling Force in the World
More women join each year

A strong tenured base

70%

In our Top 10 Markets

over half of all new
appointments in 2015
were under 35 years old

60%

% of Sales

Avon added over 10 million

Representatives in 2015

50%
40%
30%

20%
10%
0%
< 4 Months ~

~ 5 to 18 Months

Representative Tenure

10

> 18 Months

Strong Building Blocks to Drive Sustainable Growth

Attractive and Growing Industry

Iconic, Purpose-Driven Beauty Brand

Leadership Positions in Key Geographies

and Beauty Categories
Innovative Products Fueled by Strong R&D Capabilities

Unparalleled Representative Base

Transformation Plan Underway to Drive Profitable
Growth and Improved Financial Performance

11

2016 Total Avon YTD Q3 Actuals

YTD Q3 2016 vs YTD Q3 2015 F$MM
Adj. Operating Profit2

Revenue Growth

Revenue

-9%

+3%1

$4,553

$4,150

YTD Q3'15

Top Markets growing ahead

of ROW

+60 bps

YTD Q3'16

5.6% Adj. OM

6.2% Adj. OM

$255

$258

Adj. Operating Profit

YTD Q3'15

Cost Savings

YTD Q3'16

Net Debt
($83M)

1.
2.

12

Continue to make progress

with cost take out and
pricing, more than offsetting
390bps of FX headwinds

$90

$80

2016 Target

YTD Q3'16

Net Debt

$1,519

$1,436

Q3'15

Q3'16

Constant Currency Revenue year over year change (C$2016 rates).

2015 YTD Q3 GAAP Op profit = $102 adjusted for: $28 CTI, $118 Venezuela special item, $6 pension settlement charge
2016 YTD Q3 GAAP Op profit = $215 adjusted for: $70 CTI, ($27) Legal settlement

Debt reduction of $235

million, continue to make
progress on cash conversion

13

Creating Shareholder Value

Cerberus Partnership
Catalyst for change
Separate
NA business

14

Transformation Plan
Disciplined execution
Invest in Growth

Unlock Value
in International
Growth Markets

Drive out Cost

Improve Operational
Discipline & Execution

Improve Financial
Resilience

Three-year Transformation Plan

Description
Drive out Cost ($350M)
Improve Operating Model
Optimize Supply Chain Network

2015

2016

2017

2018

$350M
Implementation of Operating
Model and Supply Chain
Improvements
(annual run-rate benefit)

Primary focus to fuel growth

Improve Financial Resilience

Cerberus Investment
Dividend Suspension
Opportunistically Repay Debt / De-lever
Tax Planning

Invest in Growth ($350M)

Invest in our Brand & Beauty Categories
Improve Representative Engagement
Bring Social Selling to Scale

Strengthen Balance Sheet

$150M
Media Investments & Social
Selling Implementation

$200M
IT & Service Model Evolution

15

Continued focus to fund

Transformation

Focus builds
into 2017

Invest in Growth
Invest in Beauty & Brands

Strengthen the Avon Brand

Continue to build innovative pipeline

Color

Focus on our top 40 Brands

Execute disciplined pricing
16

Skincare

Fragrance

Strengthen the Brand by

telling the whole Avon story

Avon is the #3 Beauty Brand

on Facebook with 20M fans
(+ 4% in 2016)

25% growth in total global

social media reach
(Dec. 16 YoY)

280 Million Video Views

(+49% YoY)
LOreal 661M / Natura 170M Oriflame 31M

Increase media investment and

shift more focus to Digital
17

Instagram doubled growth speed

(from 53% to 98%) and reached
1.9M followers

Strong Innovation Pipeline

COLOR
AVON TRUE

SKINCARE
ANEW Ultimate Supreme

FRAGRANCE
AVON LIFE
18

Color Category

Invest in Growth

40 Brands account for

80% of Revenue
Build brands across
3 tiers to meet
consumer
needs
19

Upper Mass

Mass

Value

Executing Disciplined Pricing

Price through innovation and mix

Superior
Products

Increased
Revenue

Price to inflation
Advertising

Price
Up

Price strategically
Activation

20

Improve Representative Engagement

Top Market Focus

21

Service Model Journey Underway

Join Avon

Place your
order
anywhere

Place your
order
anytime

Receive your
order
any place

Process your
return
electronically

Pay Avon
through any
channel

Be supported
through entire
process

Leading to Integrated Social Selling Platform

22

2016 Accomplishments
Key Priorities

Status

Sale and separation North America business

Improved performance in top 10 markets
1-2% Active Representative growth
Invest in the brand Roll out Beauty for a Purpose
Pricing discipline
Evolve our Service Model
IT infrastructure to HPE
$70 million in cost savings in 2016
Resolution for our China business
Improve our balance sheet
Accomplished
Note: Based on YTD September 30, 2016 performance

23

Progress made/ongoing work

24

 Drive consistent and sustainable performance across Top Markets

Strengthen talent base and build capabilities for the future

Invest in Avon brand

Grow and improve the engagement of our Representatives
Continue to drive pricing discipline
Evolve our Service Model
Continue to drive out cost
Continue to strengthen balance sheet
25

Our Long-term Financial Goals

Metrics

26

Long-Term Financial Goals

Revenue Growth

Mid single-digit C$ Revenue growth

Representative Growth

1 to 2% Active Representative growth

Adjusted Operating Margin

Low double-digit Adjusted Operating Margin