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Why Avon Products Stock Gained 54% in January

By Demitri Kalogeropoulos – Updated Apr 20, 2019 at 11:59PM

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An aggressive restructuring plan has investors feeling much more optimistic about the business.

What happened

Avon Products (AVP) shareholders trounced the market last month as their stock gained 54% compared to an 8% spike in the S&P 500, according to data provided by S&P Global Market Intelligence.

The rally put the stock back in positive territory in the past year, with shares up 10% compared to a 1% decline in the broader market. Avon had been down by as much as 40% several times in the past 12 months.

A woman applying makeup in front of a mirror.

Image source: Getty Images.

So what

January's rally started as part of the broader market surge that saw indexes post their best January in over 30 years. But the bigger driver behind Avon's move was a restructuring plan aimed at returning the company sustainable profitability. Executives said late in the month that Avon is slashing its inventory and cutting about 10% of its global workforce, which should immediately lower costs while making sales gains easier to achieve beginning in 2019.

Check out the latest Avonearnings call transcript.

Now what

Investors will get far more detail about the restructuring moves, along with a sales and profit projection for the year ahead, when Avon reports earnings on Feb. 14. Beginning at that point, and then stretching into the quarters to come, investors' initial confidence over the rebound plan will have to adjust to the reality of the beauty products specialist's actual results.

Demitrios Kalogeropoulos has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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