On Dec. 28, 2010 NASDAQ reported avon's direct selling business model could drive high profits from sales. Since Avon is not a conventional retailer and sells through their representatives instead help to spend less money on running and marketing their business. Meanwhile the company has a higher in flow profit from commissions by sales Representatives.
The article reported "Direct selling enables Avon to be in closer contact with the final consumers, which creates better understanding of consumer requirements leading to more efficient advertising and research & development spending. Also, since products are shipped from Avon's warehouse or centralized outlets once the order is placed, it favors better inventory management."
It was also reported that the rising unemployment rate is causing people to look for alternative sources of income and Avon's direct selling business will may gain from this trend.
However NASDAQ's base forecasts suggest a decline in the number of sales representatives during 2010-13 after a period of steep rises from about 5.4 million in 2007 to 6.2 million in 2009. They based forecasts on the concerns of reduced earning potential for each sales representative and a more aggressive macroeconomic recovery.
They concluded "if the number of sales representatives instead ticks upward slightly towards 6.4 million by 2012, there could be 5% upside to our price estimate for Avon Products' stock. Our current price estimate, at $36.63, already stands about 25% ahead of market price."
Follow the link below to see the whole article.
Our base forecasts suggest a decline in the number of sales representatives during 2010-13 after a period of steep rises from about 5.4 million in 2007 to 6.2 million in 2009. Our forecasts are based on concerns of reduced earning potential for each sales representative and a more aggressive macroeconomic recovery. If the number of sales representatives instead ticks upward slightly towards 6.4 million by 2012, there could be 5% upside to our price estimate for Avon Products' stock. Our current price estimate, at $36.63, already stands about 25% ahead of market price.
http://community.nasdaq.com/News/2010-12/slow-recovery-could-play-into-avons-business-model.aspx?storyid=50834#ixzz19aRGzVML
Representatives post comments and let know what you think. Is there going to be a up trend or down trend for Avon Representatives
No comments:
Post a Comment