Avon Operating Profit Beats on Cost Cuts, Higher Sales

Tuesday, 12 Feb 2013 08:05 AM

 

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Avon Products Inc. reported a better-than-expected quarterly profit on Tuesday as the beauty company sold more items, lined up more sales representatives and cut marketing and personnel costs.

Avon's business, which struggled throughout much of 2012 as sales "reps" dropped out and business stalled in key markets, showed what Chief Executive Sheri McCoy in a statement called "early signs of stabilization" as sales in top markets such as Brazil and Russia improved.

Avon said sales were 2 percent higher the quarter that ended Dec. 31, and that the number of sales representatives increased 1 percent.

In Brazil, its top market, revenue excluding the impact of currency was up 10 percent as more sales representatives signed up. Business in Russia also improved, rising 3 percent.

But Avon's North American revenue fell 12 percent, continuing a years-long decline in its home market.

Avon reported a net quarterly loss of $162.2 million, or 37 cents per share, compared with a loss of $400,000, or nil per share a year ago, and the direct seller of cosmetics said revenue fell 1 percent to $3 billion a year earlier.

On an adjusted basis, which excluded factors like a writedown for its Silpada business, Avon had a profit from continuing operations of 37 cents per share, beating Wall Street analyst estimates by 10 cents, according to Thomson Reuters I/B/E/S.

In announcing the results, Avon did not provide an update on a U.S. probe into whether the company had broken anti-bribery laws overseas several years ago. In November, the company had said discussions were "ongoing."

© 2014 Thomson/Reuters. All rights reserved.

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