Question

How Inflation and Exchange rate affected Avon Products Inc.?

Answer 1

Inflation refers to an economic term that refers to an environment of generally rising prices of goods and services within a particular economy and Inflation is one of the factors that has a negative effect on currency’s value and foreign exchange rate.The avon products declined its sale over certain percentage as it faced weak economic environment and underwent restructuring in its operations.After the year 2013 the annual growth rate slowed down by 4.9% in Latin America from where the company earns more than 50% of its revenue.North America experienced 17% dollar decline and 18% in its active representative days.Avon has been taking aggressive measures to recover its loss business in the North America.Lack of demand in the two most important regions it declined by 7%.Avon product is at more than 10% premium to current market price.When Avon introduced its premium product for which the product pricing was not suitable for an economy where consumer price sensitivity for luxury goods for cosmetics was at a higher price,because during that time the consumer spending in brazil had declined because of the high households debt.