The global beauty company,
Avon Products Inc.
) reported adjusted earnings of 12 cents per share for
first-quarter 2014, below the Zacks Consensus Estimate of 20
cents and plunged 50% from the year-ago quarter's earnings of 26
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Moreover, on a reported basis, the company posted a loss of 38
cents per share compared with a loss of 3 cents in the year-ago
Total revenue for the quarter declined 11.1% year over year to
$2,183.6 million compared with $2,456.0 million a year ago.
Furthermore, total revenue missed the Zacks Consensus Estimate of
$2,240.0 million. On a constant currency basis, total revenue
declined 3% year over year.
During the quarter, the company registered an increase of 3% in
price/mix, while Active Representatives and total units declined
4% and 6%, respectively. The company's average orders were up 1%
in the quarter.
Avon, which competes with
Inter Parfums Inc.
Nu Skin Enterprises Inc.
), registered a 12% revenue decline in its Beauty Products and 9%
decline in Fashion & Home revenues.
Adjusted gross margin of this Zacks Rank #4 (Sell) company
expanded 120 basis points year over year to 61.5%, on account of
negative currency translation effects primarily due to Europe,
Middle East & Africa.
Adjusted operating margin contracted 240 basis points to 6.1%,
attributable to revenue decline related to fixed expenses along
with negative foreign currency translation as mentioned for gross
In the quarter, Avon's revenues in
fell 7% year over year to $1,066.7 million, while it rose 7% on a
constant-dollar basis. Revenue growth on a constant dollar basis
resulted from an increase in average order, offset by reduction
in Active Representatives. On a currency neutral basis, revenue
increased 5% in Brazil and 54% in Venezuela, while it declined 8%
in Mexico. Units sold and Active Representatives were each down
1% year over year.
, sales skidded 22% year over year to $295.7 million, mainly due
to a fall in Active Representatives and decline in units sold. On
a constant dollars basis, revenues were down 21%. Units sold for
the region waned 25% year over year, while Active Representatives
slipped 18%. Regional Beauty and Fashion & Home sales were
each down 21%.
The beauty product manufacturer's revenue of $654.8 million in
Middle East and Africa
was down 11% year over year. On a currency neutral basis, revenue
dipped 5%, driven by a fall in Active Representatives. Regional
breakup shows that sales declined in almost all regions with
Russia down 11%, U.K. down 6% and Turkey down 3%, while sales in
South Africa were up 1%. For the region, Avon registered a 6%
decline in both Active Representatives and units sold.
division's revenue dipped 17% to $166.4 million, while constant
dollars revenue declined 10%. The region marked an 8% decline in
Active Representatives and a 12% fall in units sold. Country
wise, the region recorded a 42% and 1% revenue decline in China
and Philippines, respectively, on a constant dollar basis.
Other Financial Details
The leading global beauty company exited the quarter with cash
and cash equivalents of $795.1 million, long-term debt (excluding
current maturities) of $2,525.9 million, and shareholders' equity
of $931.5 million.
Moreover, in conjunction to the earnings release, the company
announced a quarterly dividend of 6 cents, payable on Jun 2,
2014, to shareholders of record as on May 15.
Headquartered in New York City, Avon directly sells cosmetics,
fragrances, toiletries, jewelry and accessories. The company
markets globally through more than 6 million independent sales
representatives and is the world's largest direct seller of