SAN DIEGO, Feb. 15, 2019 /PRNewswire/ -- Johnson Fistel, LLP announced that a class
action has been commenced on behalf of purchasers of Avon Products,
Inc. (NYSE: AVP) ("Avon") common
stock during the period between August 2,
2016 and August 2, 2017 (the
"Class Period").
If you wish to serve as lead plaintiff, you must move the Court
no later than April 15, 2019. If you
wish to discuss this action or have any questions concerning this
notice or your rights or interests, please contact Jim Baker at (jimb@johnsonfistel.com) at
619-814-4471. If emailing, please include a phone number. To
view a copy of the complaint [Click here ].
[Click here to join this action]
The complaint charges Avon and certain of its current and former
officers with violations of the Securities Exchange Act of
1934. Avon is a global manufacturer and marketer of beauty
and related products. Avon's business is conducted primarily
in one channel, direct selling to Avon representatives. Avon
representatives then resell Avon products to end-user
customers. As of December 31,
2016, Avon had approximately 6 million active
representatives.
The complaint alleges that during the Class Period, in order to
inflate its reported revenue and representative growth metric, Avon
engaged in an undisclosed scheme whereby it significantly loosened
its credit terms in order to recruit new representatives in
Brazil, its largest market.
Avon did not disclose the changes to its credit terms in
Brazil. Avon also failed to increase its allowance for
doubtful accounts to account for the changes to its credit terms in
Brazil. As a result of the concealment of defendants' scheme
during the Class Period, the price of Avon stock was artificially
inflated to as high as $6.89 per
share.
On November 3, 2016, Avon filed
its Form 10-Q for the quarterly period ended September 30, 2016 and disclosed that its
operating expenses and margins had been negatively impacted by
higher bad debt expense. Over the next two days, the price of
Avon stock dropped $0.47 per share to
close at $5.94 per share on
November 4, 2016, a decline of more
than 7%. On February 16, 2017,
the Company issued a press release announcing its fourth quarter
2016 results and held a conference call to discuss the
results. The Company reported a net loss of $0.03 per share and a 2% decline in active
representatives. The Company also disclosed a $35 million bad debt charge attributable to the
previously undisclosed changes to credit terms to recruit new
representatives in Brazil. As a result of this news, the
price of Avon stock dropped $1.09 per
share to close at $4.77 per share on
February 17, 2017, a decline of
nearly 19%. On the following day, February
18, 2017, the price of Avon stock dropped again, falling
over 3% to close at $4.61 per
share. On May 4, 2017, Avon
issued a press release announcing its first quarter 2017 results
and held a conference call to discuss the results. The
Company reported a net loss of $0.10
per share and a 3% decline in active representatives. On the call,
Avon disclosed that despite its earlier assurances that the
Brazil bad debt problem had been
fully accounted for in 2016, the Company was recording another
significant charge for bad debt tied to Avon's decision to loosen
its credit terms to recruit new representatives in Brazil. As
a result of this news, the price of Avon stock dropped $1.03 per share to close at $3.62 per share on May 4,
2017, a decline of 22%.
Then, on August 3, 2017, Avon
issued a press release announcing its second quarter 2017 financial
results and held a conference call to discuss the results.
The Company reported a net loss of $0.12 per share and a 3% decline in active
representatives. The Company also reported that Brazil revenue was "down 2% in constant
dollars, primarily driven by a decrease in Active
Representatives." On the call, Avon's CFO acknowledged that,
despite Avon's earlier representations, the remedial actions in
Brazil (i.e., stricter
credit terms applied to recruiting new representatives) were
negatively impacting active representatives and revenue in
Brazil. As a result of this news, the price of Avon stock
dropped $0.36 per share to close at
$3.00 per share on August 3,
2017, a decline of nearly 11%.
Plaintiff seeks to recover damages on behalf of all purchasers
of Avon common stock during the Class Period.
About Johnson Fistel,
LLP:
Johnson Fistel, LLP is a nationally
recognized shareholder rights law firm with offices in California, New
York, and Georgia. The firm
represents individual and institutional investors in shareholder
derivative and securities class action lawsuits. For more
information about the firm and its attorneys, please visit
https://www.johnsonfistel.com. Attorney advertising. Past results
do not guarantee future outcomes.
Contact:
Johnson Fistel, LLP
Jim Baker, 619-814-4471
jimb@johnsonfistel.com
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SOURCE Johnson Fistel, LLP