Why Avon Products, Inc. Stock Plunged Today

By Steve SymingtonFool.com

What:Shares of Avon Products were down 18% as of 11:45 a.m. EST Monday amid market turmoil in China.

So what:China's stock market has suffered precipitous declines over the past few days. As of this writing on Thursday, the Shenzhen Composite Index sits down 8.2%, while the Shanghai Composite Index has fallen 7%.

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So how does that affect Avon? For one, keep in mind just last month the company struck a deal to sell its struggling North American business to hedge fund Cerberus Capital Management, thereby increasing the respective contributions to overall results of its remaining geographic markets.And though the Latin America and EMEA regions still generate the bulk of Avon's total revenue, sales in the Asia Pacific region fell 16% year over year last quarter to a still-significant $146.2 million, as growth from the Philippines was more than offset by a steep 42% decline in China.

At the time, Avon CFO James Scully noted, "It is clear that we do not have the right go-forward plan for China at this point."

Now what: But regardless of whether Avon finds the "right go-forward plan" there, continued economic strife in China simply doesn't bode well for Avon's APAC region as it works to return its business to sustained, profitable growth. In the end, I can't blame Avon investors for taking another big step back today.

The article Why Avon Products, Inc. Stock Plunged Today originally appeared on Fool.com.

Steve Symington has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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