Avon Products (AVP, Financial) is a manufacturer and marketer of beauty and related products. As management guides the company through an operational turnaround in North America and tries to build a more enduring foundation in all of its markets, Avon continues to suffer from the difficulties imposed by an emerging market slowdown. While Avon has demonstrated some progress in its long turnaround, worries over macroeconomic conditions, the continued strength of the dollar and the weakness of the Brazilian Real have made forecasting difficult. Management has been forced to respond to immediate issues at the expense of longer-term challenges involving representative engagement and the company’s supply chain. We believe management is up to the difficult task of balancing out the company’s short- and long-term investments. Avon has an extensive operating history in Latin America and has managed through several currency crises in these countries. While global challenges remain, the turmoil in Latin America may actually help the company in its recovery as women seek to supplement depressed incomes by selling Avon’s products. We have continued to add to the position over the calendar year on price weakness.
From Wallace Weitz (Trades, Portfolio)'s Partners Value Fund commentary for third quarter 2015.
