StockCall Research on Nu Skin and Avon: Survival Mode Engaged
LONDON, January 22, 2013 /PRNewswire/ --
Tough economic scenario plays havoc on all kinds of stocks, but its impact is more pronounced for the sectors led by discretionary spending. When one has to budget ones income and spending, it is obvious that he would put his basic needs over his desire to spend money on facial creams and other personal care products. In light of this, StockCall has started preliminary reporting on Nu Skin Enterprises Inc. (NYSE: NUS) and Avon Products Inc. (NYSE: AVP). Access these free reports now at http://www.stockcall.com/todaysopinions
Tough Times at Avon
So, naturally, companies like Avon Products Inc. and Nu Skin Enterprises are going through tough times. Avon has been long regarded as an attractive stock for investors looking for its steady dividend income. However, late last year, the company announced a dividend cut, bucking the 22-year long trend of dividend increases. Get our analyst technical insight on Avon by registering today at http://www.StockCall.com/AVP012213.pdf
Dividend cut is not the only woe that this direct sales giant is facing. In fact, dividend cut in itself points to bigger strategic level problems with the company. Avon had been facing declining EPS for the past couple of years. The first three quarters of the current fiscal year have not been kind either. The company not only reported a decline in its EPS, but its revenue also dropped. It now seems to be in the full life-saving mode to regain its position in the industry. The company let go of its long time CEO Andrea Jung, who has been partially blamed for the decline in the company's fortunes. Under Jung's leadership, Avon tried to make foray into the traditional retail model for its products, veering away from its unique proposition of being a direct sales company. As the financial figures would tell you, the move failed miserably as the new strategy placed the company directly in competition with personal care products giants like P&G and Johnson & Johnson.
Nu Skin Does Relatively Better
Nu Skin Enterprises Inc. [Free Research Report on NUS] [1], on the other hand, is looking to report 19 percent increase in its revenue for the fourth quarter of the year. It is scheduled to announce its fourth quarter financial numbers on February 6th. However, not all is well with Nu Skin either. The company's business model is under considerable scrutiny after the Herbalife hullabaloo in the market. Like Herbalife, Nu Skin also operates on Multi Level Marketing model and thus is likely to be taken as a pyramid scheme. Nu Skin has the usual mix of anti ageing products and nutritional supplements in its portfolio. While the company is reporting consistent growth in its sales and profits, it is difficult to ignore that MLM companies have long been accused of providing misleading figures. Therefore, it is difficult to take the financial numbers at their face value.
Both Avon and Nu Skin are looking to expand their brands in international markets. While Avon started the process under its erstwhile CEO Andrea Jung and yielded lukewarm results, Nu Skin is about to go ahead with its five-year plan to consolidate its position in emerging markets like China.
Avon is also looking at dire times as it plans to slash its workforce by 1,500 in order to curtail costs. The company also made questionable decision to forego Coty offer of $24.75 per share. Its stock is now trading in the vicinity of $16 a pop. Apart from tough economic scene, both the companies seem to be dealing with myriad of internal problems like questionable business model and inefficiencies.
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- Nu Skin Enterprises Inc. Technical Analysis [ http://www.StockCall.com/NuSkinEnterprisesInc012213.pdf ]
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