Avon Products Inc. (AVP) posted a 30% drop in third-quarter
profit amid foreign-exchange effects and restructuring-related
costs.
But volume slid 19% in China, which has been a strong point for
the company, and 5% in North America as earnings topped analysts'
expectations.
Sales of beauty products are starting to show some improvement
after a sharp dip during the recession. Several beauty products
companies have noted improved sales, although customers are
expected to stay frugal even as global economies recover. In the
past, beauty product sales held up well during recessions, as some
believe women spend more on small extravagances, like lipstick,
during tough times. But that resilience wasn't seen in the latest
downturn.
Avon, which has been undergoing a years-long restructuring that
includes broad job cuts, posted earnings of $156.2 million, or 36
cents a share, down from $222.6 million, or 52 cents a share, a
year earlier. The results included 6 cents and 2 cents,
respectively, of restructuring costs.
Revenue fell 4% to $2.6 billion, but rose 7% on a local-currency
basis. Volume rose 5% overall and 6% at its beauty-products
segment.
The mean estimates of analysts surveyed by Thomson Reuters were
earnings of 40 cents and sales of $2.57 billion.
Avon's gross margin fell to 62.6% from 63.1% on currency
impacts.
Avon's shares closed at $33 Wednesday and didn't trade
premarket.
-By Tess Stynes, Dow Jones Newswires; 212-416-2481;
Tess.Stynes@dowjones.com
-By John Kell, Dow Jones Newswires; 212-416-2480;
john.kell@dowjones.com