Avon Profit Rises Slightly, but Sales Fall
August 02 2016 - 8:40AM
Dow Jones News
Avon Products Inc.'s profit rose slightly in the latest quarter,
though sales declined as the direct seller works through continued
shifts in consumer trends in the beauty industry.
"Our second-quarter results came in slightly above our
expectations, driven by operating performance that was better than
anticipated. We also saw some modest easing in foreign currency
pressure," said Avon Chief Executive Sheri McCoy.
Ms. McCoy said the company's performance had improved with
cost-cutting and pricing discipline in an effort to build the brand
name.
Avon sells cosmetics, perfumes and accessories through a network
of roughly 6 million representatives world-wide. In March, after
completing the sale of its North American operation to Cerberus
Capital Management LP for about $435 million, Avon said it would
eliminate about 7% of its workforce and move its corporate
headquarters to the United Kingdom, the latest step in a yearslong
turnaround of the struggling beauty company.
In recent years, as consumers have turned away from Avon's
signature direct sales approach and moved toward the internet, and
as the cosmetics industry has become more competitive, Avon stock
has fallen sharply.
For the quarter ended June 30, the beauty-products maker posted
a profit of $33 million, a rise from $28.8 million a year earlier.
On a per-share basis, earnings fell to 6 cents a share from 7 cents
a share a year earlier. Adjusted earnings were 7 cents a share, up
from 9 cents a share a year earlier.
Revenue fell 8.3% to $1.43 billion.
Avon beat expectations of analysts polled by Thomson Reuters,
who had forecast 2 cents in per-share earnings on $1.41 billion in
revenue.
Sales in Avon's Europe, Middle East and Africa segment fell 2%
year-over-year to $520.9 million. South Latin American sales fell
12% to $535.7 million, North Latin America sales declined by 5% to
$224.4 million, and the Asia Pacific segment's sales fell 10% to
$141.9 million.
Avon's number of representatives actively selling products rose
1% compared with last year; increased numbers in Europe, the Middle
East and Africa and North Latin America were offset by declines in
Asia Pacific. The average order grew 4% during the quarter, helped
by favorable pricing.
Gross margin fell to 60.6%, down 0.4% year-over-year.
Avon stock, which has lost 27% of its value over the past 12
months, was up 6.9% premarket at $4.45 a share.
Write to Brittney Laryea at brittney.laryea@wsj.com
(END) Dow Jones Newswires
August 02, 2016 09:25 ET (13:25 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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