Avon Management's Stock Sales Contradict Its Positive Outlook

Avon Products (AVP) recently released results (Feb 6 to be exact). Andrea Jung, chairman and CEO, commented:

With 9% revenue growth in the fourth quarter, we continue to feel good about the progress we are making against our turnaround plan.

A closer reading of the press release and associated financials indicates Q4 operating margin was 10.8%, versus 12.4% in the prior-year quarter. Accounts receivable were up 10% and inventories were up 12%. All this is occurring in the context of product simplification. The basic metrics are not aligning for growth; Avon is dragging some serious boat anchors that should be seeing improvement by now.

The stock is currently trading near its 52-week high. So if management feels good about progress, will the stock see new highs? On Jan 31, 07 Andrea Jung exercised 180,000 options and immediately sold 83,115 on a non-open market basis at $34.19. It seems that if the boss is hedging his bet, investors should be in a caveat emptor frame of mind.

Check out Yahoo Finance insider transactions on AVP. Money talks, BS walks.

AVP 1-yr chart: