DOW JONES NEWSWIRES
Avon Products Inc. (AVP) posted a 36% drop in first-quarter
profit as the direct seller of cosmetics' sales continue to decline
because of the stronger dollar, while the volume of sales was
flat.
The results come as the beauty products industry has been
hard-hit by a continued curbing of consumer spending, which
contributed to high-end beauty company Estee Lauder Cos.' (EL)
Monday report of a 70% drop in quarterly profit.
For its part, Avon has been cutting costs as part of a
years-long restructuring, while also trying to appeal to more
budget-conscious consumers. It is also boosting its recruiting
efforts, with the hopes of attracting some women who may be out of
work to its sales force. /
Avon posted earnings of $117.3 million, or 27 cents a share,
down from $184.7 million, or 43 cents a share, a year earlier.
Restructuring costs were 2 cents and 4 cents, respectively.
Net sales fell 13% to $2.18 billion, but up 3% on a
local-currency basis.
Analysts polled by Thomson Reuters expected a 33-cent profit on
$2.13 billion in revenue.
Gross margin edged up to 62.8% from 63.1% as currency changes
more than offset benefits from Avon's restructuring.
North American revenue dropped 11% on a 9% drop in sales volume,
with the home category seeing a 24% slump. Latin America reported
14% revenue growth on a local-currency basis with volume up 7%.
Shares closed Monday at $25.22 and were inactive premarket.
-By Donna Kardos and Kevin Kingsbury, Dow Jones Newswires;
201-938-5963; donna.kardos@dowjones.com