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Shares of the world's largest direct seller of cosmetics dropped 13.4 percent to $19.93 in early trading.
Avon said on Thursday that it got the subpoena from the U.S. Securities and Exchange Commission on Wednesday. The SEC is investigating the company's contact during 2010 and 2011 with certain analysts and other representatives of the financial community, Avon said in its quarterly filing.
The SEC issued a formal order of investigation of that and the Foreign Corrupt Practices Act matter that Avon itself has been investigating since June 2008. The company has been cooperating with the SEC and the U.S. Justice Department on that matter since 2008.
"One inquiry is bad," said Stifel Nicolaus analyst Mark Astrachan. "Two is a major headache, and we believe the formal order relating to the FCPA investigation indicates a significant step-up in activity, with a resolution unlikely to come any time soon."
Under Andrea Jung -- chairman since 2001 and chief executive officer since 1999 -- Avon has been dogged by poor performance in Brazil and Russia, poured tens of millions of dollars into its international bribery investigation and has struggled to stem declines in a sluggish U.S. market.
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Avon also said it was reassessing its long-term strategy after reporting lower-than-expected quarterly sales.
"The CEO is responsible for the overall outcome of a company and she has to be under pressure with these results," said Bernstein analyst Ali Dibadj. "It would be unfair to shareholders if there weren't pressure on management at this point."
The strategy review comes just eight months after the company changed its corporate structure and shook up management in an attempt to fix problems that had led it to miss earnings expectations.
On Thursday, Avon blamed a decline in sales in Brazil on a difficult implementation of a new computer system and said a tough economic environment in several regions had hurt revenue growth.
The company no longer expects revenue to grow by a mid-single-digit percentage rate this year.
Avon reported third-quarter net income $164.2 million, or 38 cents per share, down from $166.7 million, or 38 cents a share, a year earlier.
Revenue rose 5.7 percent to $2.76 billion, missing Wall Street estimates of $2.83 billion, according to Thomson Reuters I/B/E/S.
Avon also sold 5 percent fewer products in the quarter.
In North America, sales continued to slide, falling 8 percent in constant dollars as more sales representatives dropped out, while operating profit fell 85 percent.
Blaming rising product costs, Avon said gross margin fell 0.4 percentage points to 63.9 percent.