Avon North America Sees Rare Profit in Second Quarter

Sales at Avon Products Inc. (AVP—NYSE) continued to decline in the second quarter, but the beauty company’s lagging North America division posted its first quarterly profit in several years, Avon said Thursday.

Second-quarter revenue fell 17 percent to $1.8 billion, weighed down by currency pressures in several foreign markets. On a constant-dollar basis, overall sales remained flat, with growth in Russia and the Philippines offset by declines in Brazil, China and the U.S.

The New York-based company reported adjusted earnings of 11 cents a share, surpassing the 7 cents predicted by analysts but dropping 20 cents from a year ago.

Heavy cost-cutting initiatives are paying off for the company in North America, where it saw a modest profit for the first time since the first quarter of 2012. Despite an improving bottom line, the number of Avon sellers in North America fell 16 percent from the second quarter of 2014. Overall, the brand’s salesforce shrunk by 2 percent from a year ago.

Avon said its expectations for the full year remain the same. The company forecasted modest constant-dollar revenue growth, with continued negative effects from currency exchange rates.


Avon Sells UK Skincare Brand to Walgreens

Photo: Products on display at a Liz Earle store on England’s Isle of Wight. (Liz Earle photo)

Natural skincare brand Liz Earle is not commonly associated with Avon, which might have influenced the company’s decision to divest the U.K.-based business. Avon Products Inc. announced Wednesday that pharmacy giant Walgreens Boots Alliance has acquired the retail brand for approximately $215 million.

In a statement, Avon CEO Sheri McCoy said the divestiture allows Avon to focus on promoting its own skincare and beauty portfolio. “This transaction enables Avon to realize immediate benefits while continuing to strengthen our balance sheet,” McCoy noted. “Liz Earle is the perfect fit for Walgreens Boots Alliance where it already has a strong presence in its retail stores.”

Avon acquired Liz Earle in 2010, just months before acquiring Silpada Designs, the direct selling jewelry brand that Avon divested in July 2013. Unlike Silpada, Liz Earle operated as a standalone business from Avon’s core direct selling business. Last year, the skincare brand accounted for 1 percent of Avon’s consolidated revenue and adjusted operating profit and 3 percent of its EMEA (Europe, Middle East & Africe) revenue and adjusted operating profit.

Avon’s latest turnaround measure follows a disappointing 2014 for the beauty brand, which reported a net loss of $331 million on an 11 percent revenue decrease for the year. The company said it will use the proceeds from the Liz Earle sale in its planned redemption of $250 million, 2.375 percent notes due in March 2016.

Avon Posts Earnings Miss on Weakening Domestic Sales

Avon Products Inc. (AVP—NYSE) posted first quarter results on Thursday amid reports the company is considering a sale of its North American business. Earnings fell below Wall Street estimates as domestic revenue continued to decline and the strong dollar overshadowed growth in foreign markets.

Quarterly revenue dropped 18 percent to $1.8 billion, a 1 percent increase in constant dollars. North America revenue was also down 18 percent, hurt by the market’s 17 percent decrease in active representatives. Overall, the company’s representative count was down 1 percent from 2014, though up on a sequential basis.

Earlier this month, The Wall Street Journal reported that Avon is exploring options to hasten a turnaround, including a possible sale of its deteriorating North American business. CEO Sheri McCoy addressed the media attention at the beginning of Avon’s earnings call on Thursday. She said the company aims to provide sustainable, profitable growth while creating value for its shareholders and opportunity for its representatives, and declined to comment further.

Excluding some items, earnings came in at 4 cents a share, a 67 percent decline from last year. Analysts had predicted earnings of 7 cents a share in the period. Diluted losses were 33 cents a share versus 38 cents a year ago. The results reflect a higher adjusted tax rate of 67.9 percent, compared to 46.3 percent in the first quarter of 2014.

The cosmetics maker reported constant dollar growth in all foreign markets, with EMEA leading the way at 9 percent over the prior year. Management said currency pressures were higher than anticipated in the quarter.

via Avon Posts Earnings Miss on Weakening Domestic Sales — Direct Selling News.

Avon Drops off S&P 500 after 50 Years

Avon Products Inc. is ending a 50-year run on the S&P 500 in yet another symptom of the company’s poor performance over the past few years.

Index manager S&P Dow Jones Indices announced late Friday that it will transfer the beauty products manufacturer to its MidCap 400 index after the close on Friday, March 20.

Used by investors as a benchmark to gauge overall stock market performance, the S&P 500 focuses on the large-cap segment of the market. Companies are selected based upon criteria such as market capitalization, liquidity and industry grouping.

S&P Dow Jones Indices attributed the move to Avon’s shrinking market value, which has fallen to $3.2 billion, well below the $4 billion minimum generally imposed upon potential S&P 500 candidates. Also dropping to the S&P MidCap 400 are oil and gas firms Denbury Resources Inc. (DNR) and Nabors Industries Ltd. (NBR). The three companies moving up to the S&P 500—including apparel manufacturer Hanesbrands Inc. (HBI), which will replace Avon—each have a market cap exceeding $12 billion.

New York-based Avon has been among the worst performers on the S&P 500 in recent years, as the company’s revenue sank from $11.3 billion in 2011 to $8.9 billion in 2014. Shares in Avon fell 5.7 percent on Monday to $7.28.

Avon has been a fixture on the S&P 500 since May 1964. The Pampered Chef parent Berkshire Hathaway joined in January 2010, but Avon is the only company on the index to operate exclusively through direct sales.

Avon Losses Widen as Quarterly Earnings Drop

An increasingly strong dollar weakened fourth quarter salesat Avon Products Inc., and the beauty company expects to feel continued negative effects in 2015. On Thursday the global brand projected that 2015 revenue will decline by 12 percentage points due to currency rates.

Fourth quarter revenue decreased 12 percent to $2.34 billion; however, Avon reported modest 5 percent growth in constant dollars. Quarterly volume fell 3 percent, while the company’s average order increased 9 percent. Active representatives were down 4 percent.

Quarterly sales fell 14 percent in the Beauty category, with a 5 percent increase in constant dollars. Fashion & Home sales fell 13 percent and rose 1 percent in constant dollars.

North America continues to pose the greatest challenge for Avon. The New York-based company saw regional sales fall 12 percent in the quarter and 17 percent for the full year. Avon posted global revenue of $8.85 billion for 2014, an 11 percent decrease versus the prior year, or relatively unchanged in constant dollars. The company reported a net loss of $331 million, or 75 cents a share, broadening its $69 million loss in 2013. Excluding one-time costs, operating profit totaled $734 million.

“While progress against our financial goals in 2014 was slower than I would have liked, I am pleased with the sequential improvements we made in several key markets and categories in the second half of the year,” said CEO Sheri McCoy. “We have stronger management teams across our key markets and better discipline in executing consistently against Avon’s core processes.”

The company also reported declining sales outside the U.S., where it generates 88 percent of its sales. Revenue fell 7 percent in both EMEA (Europe, Middle East & Africa) and Asia Pacific. Latin America, Avon’s most profitable market, posted revenue of $4.24 billion for the year, a 12 percent decrease versus 2013.

The company says that it is working to mitigate the impact of foreign currency rates. In the meantime Avon has announced plans to pull out of Jamaica and other Caribbean islands, the Jamaica Observer reports. A Jan. 29 email from Pablo Muñoz, President of Avon North America, informed distributors that, effective Monday, they will no longer be able to place orders to the company. Avon’s regional managers were not available to provide comment on the contents of the email.

Avon China Probe Concludes with $135 Million Settlement

The Department of Justice will defer criminal prosecution of Avon Products Inc. for three years, according to a bribery probe settlement disclosed Wednesday. A six-year federal investigation of the company has ended with Avon’s Chinese subsidiary pleading guilty and accruing $135 million in fines.

The investigation focused on the period from 2004 to late 2008. The SEC alleged that Avon China’s inaccurate and incomplete bookkeeping during that period conceals payments to government officials who ultimately awarded Avon the country’s first direct selling license.

According to the SEC’s Manhattan court filing, Avon violated the Foreign Corrupt Practices Act (FCPA) by bankrolling $1.65 million in travel, meals and entertainment for Chinese officials. The company also provided $8 million in cash and gifts without properly recording the expenses. Additional payoffs went to state-owned media outlets to help the company avoid negative press.

The direct selling leader has spent about $300 million on an internal investigation launched in 2008. In the settlement, the DOJ recognized Avon’s cooperation and the “extensive remediation” it has undergone to improve compliance and internal controls.

Avon stated in May that it would settle the probe, which includes $68 million in fines to the DOJ and $67 million to the SEC. The agreement includes a corporate compliance monitor to oversee monitoring and reporting obligations for three years. With the company’s ongoing compliance, the charges will then be dropped.

Avon Beats Q3 Expectations, Still Shows Signs of Struggle

The release of Avon Products Inc. third quarter results Thursday before markets opened surpassed earnings expectations while missing revenue forecasts. The company reported adjusted net income from continuing operations of $99 million, or 23 cents per diluted share, beating expectations of 16 cents, according to the Zacks Consensus Estimate, and jumped approximately 64.3 percent from 14 cents, or $60 million, for the third quarter of 2013.

“We began the year with the expectation that the second half of 2014 would show improvement relative to the first half, and Avon’s third quarter results are consistent with modest improvement on both top and bottom line,” said Avon CEO Sheri McCoy. “We saw good results from our EMEA region, while sluggish performance in Brazil contributed to softer results in Latin America. Despite the strong headwinds in a number of markets, we continue to make progress on Avon’s turnaround journey.”

Still shares dropped over 9 percent Thursday, according to Zacks, after results fell short of revenue forecasts. The global cosmetics company posted revenue of $2.14 billion in the period, down 8 percent, or up 1 percent in constant dollars, from $2.32 billion during the prior year period. Analysts expected $2.15 billion, according to Zacks. Revenue was negatively affected by weak foreign exchange rates and lower sales volume, partially offset by the favorable net impact of mix and pricing, primarily due to inflationary pricing in Latin America.

Beauty sales declined 9 percent, but increased 1 percent in constant dollars. Fashion & home sales declined 11 percent, or 4 percent in constant dollars.

Brazil is the company’s largest market and Latin America is its most profitable region, yet Brazil revenue was up only 1 percent, or relatively unchanged in constant dollars. According to the company, this was partially impacted by high levels of competitive activity.

“In addition, the Brazilian economy has not recovered as anticipated after the World Cup. Consumer spending also seems to be impacted by the uncertain economic environment, the election cycle and high cost of debt,” McCoy said during the earnings conference call on Thursday. “That being said, while growth may be slowing, Brazil remains a highly attractive market, and we are committed to participating in its longer-term growth.”

Further results showed that third quarter 2014 gross margin was 61.9 percent and adjusted gross margin was 62.0 percent. Adjusted gross margin was 110 basis points lower than the prior-year quarter.

Read the full results here.

Avon’s DSA Withdrawal Raises Questions

Avon Products Inc. surprised much of the direct selling community with its public withdrawal from the U.S. Direct Selling Association earlier this month.

Avon resigned its membership Sept. 9 with a letter to the DSA executive committee. It was a significant move. Avon is, after all, the world’s second-largest direct selling company (behind Amway) and an iconic U.S. brand. But the real news came three days later, when Avon posted a letter signed by Senior Vice President Corporate Relations and Chief Communications Officer Cheryl Heinonen and addressed to other U.S. direct selling companies on the media center of the Avon website attempting to explain the rationale behind its withdrawal.

“This decision came after careful consideration and more than a year of thoughtful discussion,” Heinonen’s letter says. “This decision was driven by two key issues: We believe the association’s agenda in the U.S. is overly focused on the issues of a few specific brands rather than industry-wide challenges. We believe that the U.S. DSA Code of Ethics requires updating to better reflect the current state of the industry in the U.S.”

Despite these statements, the real motivation behind Avon’s resignation remains unclear. Heinonen’s letter does not provide any specific examples of the issues on which Avon feels DSA is overly focused nor the Code of Ethics updates Avon seeks. On the second point, Heinonen’s letter emphasizes that Avon is not exiting the World Federation of Direct Selling Associations and will continue to abide by the WFDSA Code of Ethics. This distinction is a murky one, because the U.S. DSA Code of Ethics has tighter, more specific controls than the WFDSA Code of Ethics, which was constructed to serve as a model for local market DSA codes. In fact, the WFDSA code calls for companies to comply with the codes of the DSAs in the countries in which they are headquartered.

It also seems clear that Avon had not been actively advocating for change within the association prior to its withdrawal. U.S. DSA Chairman Truman Hunt, President and CEO of Nu Skin Enterprises, has said Heinonen had not raised the concerns she listed in her letter with him, nor with any other members of the executive committee nor with DSA management. In a letter to DSA supplier members, including Direct Selling News, DSA President Joe Mariano said: “The general observations about the Code which Avon described in connection with its decision have not been raised before now; nonetheless, Chairman Truman Hunt has requested further details from the company and specific suggestions that might be considered by the Ethics Committee, and if appropriate, by the Board.”

We can only guess as to why Avon really resigned from the largest and most valuable organization that works to support the direct selling model in Washington.  But by doing so in such an inflammatory way, the company has succeeded in, at least momentarily, keeping the focus on external factors as detractors look for pockets of weakness or dissent within the direct selling community. And that is a disservice to everyone involved, including the thousands of Avon representatives the company says it wants to protect.

Avon has challenges of its own. Shares in the company (NYSE:AVP) have fallen into the $13 range as it has posted net losses for the past two years and a turnaround effort has failed to reverse declining domestic sales. CFO Kimberly Ross resigned earlier in the month to take on the CFO role at the oil-field services giant Baker Hughes Inc. This spring, Avon agreed to pay $135 million to settle U.S. probes into corruption charges related to its business in China.

In our view, it is unfortunate that Avon decided to walk away from its seat at the industry table. But we remain confident that U.S. DSA will continue to work to foster the best interests of the companies and independent contractors from all walks of the direct selling life.

Profits Drop for Avon Products during Second Quarter

(AVP—NYSE) Avon Products Inc.’s second quarter 2014 results still show a struggle for the beauty company, but its ongoing turnaround plan is slowly making itself known as sales improve in key regions. Reporting before markets opened Thursday, Avon’s revenue came in at $2.2 billion, falling 13 percent (or 3 percent in constant dollars). Adjusted earnings were 20 cents per share, a penny below the Zacks Consensus Estimate, dropping 31 percent from 29 cents the previous year.

While the volume of products sold dropped 6 percent and active representatives worldwide were also in decline, average orders went up by 3 percent in the quarter. The company also reported that quarterly sales grew in the U.K. for the first time since 2010, up 11 percent, or 1 percent in constant dollars, primarily due to higher average orders.

“As anticipated, our second-quarter results were tough,” said Avon CEO Sheri McCoy. “While Avon’s turnaround remains challenging, we are putting the people and processes in place to lay the foundation for returning Avon to sustainable, profitable growth. As we move to the second half of the year, we continue to expect improved performance.”

Second quarter 2014 gross margin and adjusted gross margin were 63.0 percent. Adjusted gross margin was 30 basis points lower than the prior-year quarter, primarily due to the unfavorable impact of foreign exchange driven by Latin America and Europe, Middle East & Africa.

Operating profit was $93 million and operating margin was 4.3 percent in the quarter. Adjusted operating profit was $186 million and adjusted operating margin was 8.5 percent, down 100 basis points from the second quarter of 2013.

Second quarter 2014’s net income from continuing operations was $20 million, or 4 cents per diluted share, compared with net income from continuing operations of $85 million, or 19 cents per diluted share, for the second quarter of 2013. Second quarter 2014’s adjusted net income from continuing operations was $91 million, or 20 cents per diluted share, compared with adjusted net income from continuing operations of $127 million, or 29 cents per diluted share, for the second quarter of 2013.

Net cash used by operating activities was $7 million for the six months ended June 30, 2014, compared with net cash provided of $70 million for the same period in 2013, unfavorably impacted primarily by lower earnings. The overall net cash used during the six months ended June 30, 2014 was $330 million, which was comparable with the same period in 2013.

Avon’s net debt (total debt less cash) at June 30, 2014 was $1.9 billion, up $240 million from the year-end 2013 level, and $170 million lower than at June 30, 2013.

Avon also declared a regular quarterly dividend on its common stock of 6 cents per share, payable Sept. 2, 2014, to shareholders of record on Aug. 14, 2014.

Read the full results here.

Women’s History: A Tradition of Breaking through Boundaries

by Barbara Seale

Click here to order the March 2014 issue in which this article appeared or click here to download it to your mobile device.

Photo above: Delegates to the first International Congress of Working Women held in Washington, D.C., ca. 1919. (Library of Congress)

The long and winding road of women’s progress in society and the business world has had an amazing number of twists, turns and mountains to climb.

Viewed from today’s world, where Facebook COO Sheryl Sandberg encourages women to Lean In, the trail that women blazed in the not too distant past seems surprisingly bumpy.

On March 31, 1776, Abigail Adams wrote a letter to her husband, John—who later became our second president—urging him and the other members of the all-male Continental Congress to keep the country’s women in mind as they fought for America’s independence from Great Britain.

“I long to hear that you have declared an independency,” she wrote, “and, by the way, in the new code of laws, which I suppose it will be necessary for you to make, I desire you would remember the ladies and be more generous and favorable to them than your ancestors. Do not put such unlimited power into the hands of the husbands. Remember, all men would be tyrants if they could. If particular care and attention is not paid to the ladies, we are determined to foment a rebellion, and will not hold ourselves bound by any laws in which we have no voice or representation.”

Abigail Adams became one of the first in a long line of American women to use any influence they had to allow themselves and other women to develop and use their full talents and abilities.

John and Abigail’s relationship was filled with mutual trust and admiration, and they often discussed public policy. So perhaps John was teasing his wife when he replied that he could not help but laugh at her “saucy” letter. If he had been able to peer into the future, he would have known that his wife had become one of the first in a long line of American women to use any influence they had to allow themselves and other women to develop and use their full talents and abilities. If John Adams had taken his wife’s pleas to heart and convinced his fellow Continental Congressmen to extend the privileges of citizenship to all residents of the new country, including women, the history of this country and even the world might have been very different.

In Women’s History Month, it seems appropriate to reflect on how far women have come in the nearly 238 years since Abigail Adams’ letter. It would be almost two centuries before women began making their mark in direct selling, but when they did, they were as tenacious and innovative as our nation’s second first lady herself.

Educational Barriers

These young female workers were among the first women ever to operate a centerless grinder machine in a Midwest tool factory, 1942. (Library of Congress)

These young female workers were among the first women ever to operate a centerless grinder machine in a Midwest tool factory, 1942. (Library of Congress)

Abigail was fortunate, she was educated at home. But the future first lady never had a formal education—possibly the reason she became a passionate advocate for public schools to offer girls an education that was equal to the ones given to boys. If a young woman was lucky enough to attend a school, her education focused on developing her skills at household duties and chores. In fact, an academically educated woman was unusual and considered not particularly desirable as a wife.

All but a few towns in New England specifically barred girls from town schools until the late 18th century. Even then girls were often taught separately from the boys. In the South during colonial times, the education of slaves was strictly forbidden, and South Carolina even passed a law prohibiting anyone from teaching a slave to read or write, so many female ancestors of today’s accomplished African Americans were likely illiterate. The notable exception: Phyllis Wheatley. Born in West Africa, she was sold into slavery at 7 years old to the Wheatley family of Boston. They taught her to read and write and allowed her to study astronomy and geography. Then when they recognized her talent, they encouraged her poetry. She became the country’s second published African-American poet and first published African-American woman.

Phyllis Wheatley and other American women of that time started their lives before college educations were available for women. In 1831—before the Civil War—Mississippi College became the first coeducational college in the United States to grant a degree to a woman. That year it granted degrees to two women, Alice Robinson and Catherine Hall. But the situation was so rare that one of the key demands of the Women’s Rights Convention, held in Seneca Falls, N.Y., in 1848, was for coeducation for women—not the separate and unequal institutions that were available to women at the time. Very slowly, change began in the landscape of education, and through education, women’s lives began a gradual alteration. In 1870, less than 1 percent of the female population went to college. That percentage slowly rose, and by 1900 the rate was 2.8 percent. Twenty years later it was still only 7.6 percent.

Overcoming the Odds

Fay Hubbard, a 19-year-old advocate for women gaining the right to vote, sells suffragette papers on the streets of New York in 1910. (Library of Congress)

Fay Hubbard, a 19-year-old advocate for women gaining the right to vote, sells suffragette papers on the streets of New York in 1910. (Library of Congress)

Women finally gained the right to vote in 1920, signifying the beginning of a new attitude toward a woman’s contribution outside the home, and the number of college-educated women continued to climb decade by decade. In fact, by the 1980s more women than men began attending college. Today’s women have advanced educationally beyond the level that Abigail Adams or Phyllis Wheatley probably ever dreamed. Now, more women than men earn an advanced degree, as well as a bachelor’s degree. While having a degree doesn’t automatically lead to ambition or success, women’s expanded societal roles did follow their advances in education. It also coincided with greater entrepreneurialism—both in traditional and direct selling companies.

It is interesting to note that through the decades, and even centuries, with or without education, women have achieved, led and innovated. As far back as 1809, Mary Kies became the first woman to receive a patent, which was for her method of weaving straw with silk—a process which then-first lady Dolly Madison called a boost to the nation’s hat industry. History is peppered with the forgotten stories of female entrepreneurs—Eliza Lucas Pinckney, who grew and exported indigo in the 1700s; publisher, printer and businesswoman Mary Katherine Goddard, who in 1789 was forced to resign after 14 years as Baltimore’s postmaster because of her gender; Bridget “Biddy” Mason, who was born into slavery in 1818, sued her owners for her freedom, and eventually became a real estate mogul and philanthropist; Elizabeth Arden and Estee Lauder, savvy businesswomen who built empires based on beauty in the 20th century; and Katharine Graham, publisher of The Washington Post and the top executive of the Washington Post Company, who became one of the most powerful women in business.

In the direct selling industry, women were initially buyers of products from the early companies such as The Southwestern Company (now Southwestern Advantage), Fuller Brush and Avon. Since many products were directed to women, they also became distributors. Fuller Brush was the first direct selling home for many of the women who moved from distributorships to the corporate ranks. Some of them were pioneers who helped shape the industry. In 1931 Catherine O’Brien, an associate with the Fuller Brush Company, teamed up with Stanley Beveridge, a VP at Fuller Brush, to launch a new direct selling company, Stanley Home Products. Initially the company sold its high-quality household cleaners, brushes and mops door-to-door, but it soon began encouraging homemakers to invite small groups of friends to their homes for a product demonstration and light refreshments. This allowed the hostess to receive a gift of choice from the Stanley dealer, who took orders from attendees.

Mary Kay Ash, Mary Crowley, Brownie Wise and JAFRA founders Jan and Frank Day were all Stanley Home Products Dealers. On the long road to success, each of them stepped on the accelerator. Wise became a Tupperware representative and was so successful selling at her home parties that Earl Tupper himself recruited her to become a corporate executive in 1951. At the time, Tupperware was sold at retail stores, but home sales soon topped retail sales and Wise’s “party plan” method took over. She also innovated many practices that today are standards at every direct selling company—rewards, recognition, sales conventions and incentives such as extravagant trips. Her success in implementing marketing styles and recognition systems that appealed to women led her to become the first woman featured on the cover of Business Week magazine in 1954.

Jan Day and her husband, Frank, combined their first names to create the moniker for their company, JAFRA, which they founded in 1956. They wanted to offer women an excellent skincare program along with an appealing business opportunity. Within a year they invented the signature product that would be the foundation of the company for years to come: Royal Jelly Milk Balm Moisture Lotion. Its formula remained unchanged for more than 50 years. Gillette bought the successful company in 1973, and then international direct selling giant Vorwerk acquired it in 2004. Today it offers its product through some 573,000 independent consultants worldwide.

Mary Crowley also put her Stanley Home Products experience to good use when she established Home Interiors and Gifts in 1957. She had moved from Stanley to a new company, World Gift, and proved her sales and leadership skills by developing a 500-person organization in the company. Its response: The owner limited the amount of commission the female sales staff could earn. That apparently didn’t sit well with Crowley, who quit to start her own home décor company. By the 1990s Home Interiors and Gifts had surpassed $850 million in sales.

Today 10 companies on the 2013Direct Selling News Global 100 list were founded or co-founded by women entrepreneurs.

Mary Kay Ash followed her friend Mary Crowley’s example, launching Mary Kay Cosmetics in 1963 after a man she had trained was promoted over her and paid twice her salary. She created a salesforce of women—unusual in the 1960s—and fueled them with pink Cadillacs, compensation plans that paid consultants for building teams and, of course, her famous phrases of wisdom and encouragement that 13 years after her death still make her one of the industry’s most quotable icons. Her formula was wildly successful. Last year Mary Kay Cosmetics had net sales of more than $3 billion worldwide.

So many female business founders have helped make direct selling the thriving, innovative industry it is today, and many more are joining the ranks. Today 10 companies on the 2013 Direct Selling News Global 100 list were founded or co-founded by women entrepreneurs.

Impressive and Puzzling

According to the National Women’s History Museum, women’s ventures have come to comprise about a third of all U.S. businesses —and growing.

According to the National Women’s History Museum, women’s ventures have come to comprise about a third of all U.S. businesses—and growing. If you shrug when you read that, remember that less than a century ago American women couldn’t even vote. But once women had role models, they seemed to be increasingly drawn to entrepreneurship.

In 1972 women owned just 4 percent of all American businesses; by 1991, that figure had climbed to 38 percent. Additionally, since 1997 the growth in the number and economic contributions of firms owned by women of color is nothing short of remarkable. Comprising just 17 percent of women-owned firms 16 years ago, firms owned by women of color now account for one in three women-owned firms in the U.S. The total number of women-owned businesses has risen by 200,000 over the past year alone, which is equivalent to just under 550 new women-owned firms created each day. There are now 8.3 million women-owned businesses in the United States. Those businesses generate revenues of $1.3 trillion—more than the combined market cap of Apple, Microsoft, General Electric, Google and Sony. Plus, revenue has grown more than twice the amount of U.S. population growth during the same period of time.

Yet executive positions have eluded most women. As far as women have come, The Wall Street Journal (WSJ) still reported last year that women make up only 16 percent of directors at Fortune 500 companies, 4 percent of chief executives at Standard & Poor’s 500 companies and 10 percent of chief financial officers at S&P 500 companies. Even below the executive levels, salaries for women lag behind those for men. According to WSJ, women earned 76.5 cents for every dollar that men did in 2012, moving no closer to narrowing a gender pay gap that has barely budged in almost a decade. The numbers are puzzling when research also shows that companies with high gender diversity simply make more money.

Organizations with the lowest rates of gender diversity had average sales revenues of $45.2 million, compared with averages of $644.3 million for businesses with the most gender diversity.

Miriam Muléy, CEO of strategic marketing consultancy and research company The 85% Niche LLC and former General Manager at Avon Products Inc., points to a study by sociologist Cedric Herring that was published in the American Sociological Review. Herring found that gender diversity accounted for a difference of $599.1 million in average sales revenue. Put that in perspective: A company with net sales of $600 million would have been No. 22 on last year’s Direct Selling News Global 100 list. Organizations with the lowest rates of gender diversity had average sales revenues of $45.2 million, compared with averages of $644.3 million for businesses with the most gender diversity.

Given the heavy doors women have historically pushed open and their documented growth in starting businesses, it’s surprising that the direct selling industry isn’t buzzing with stories of concentrated efforts to create greater gender diversity, mentoring programs and executive development tracks for women in its corporate offices. Considering the industry’s pride and experience in its personal development programs for distributors, direct selling is uniquely equipped to fuel the power of its female corporate employees and executives.

Will your company be the industry-leading organization that supercharges its growth by unlocking the untapped talents and abilities of women? Which company will lead the caravan that’s sure to follow? We can’t wait to see.

The Most Influential Women in Direct Selling – 2014

Cover Story | Women’s History | Sheryl Adkins-Green | Claire Bancino | Meredith Berkich | Lori Bush | Dr. Oi-Lin Chen | Doris Christopher | Angela Loehr Chrysler | Kathy Coover | Shelli Gardner | Jessica Herrin | Wendy Lewis | Candace Matthews | Sheri McCoy | Cindy Monroe | Kay Napier | Joani Nielson | Meg Sheetz | Pam Sowder | Jill Blashack Strahan | Connie Tang | Heidi Thompson