Avon Slumps to Strong Sell - Analyst Blog


On May 3, 2014, Zacks Investment Research downgraded global beauty firm Avon Products Inc. ( AVP ), to a Zacks Rank #5 (Strong Sell) from a Zacks Rank #4 (Sell).

Why the Downgrade?

Shares of AVP slipped 1.1% after it released its first-quarter 2014 earnings on May 1, 2014.

The top line disappointed during the reported quarter as it tanked 11.1% to $2,183.6 million. Revenues also fell short of the Zacks Consensus Estimate of $2,240.0 million with a decline in sales in all operating segments and geographical regions.

Avon, which competes with Inter Parfums Inc. ( IPAR ), registered a 12% revenue decline in its Beauty Products and a 9% decline in Fashion & Home revenues. Region wise, Avon's revenues fell 7% in Latin America, 22% in North America, 11% in Europe, Middle East and Africa (EMEA) and 17% in the Asia-Pacific division.

Avon's quarterly adjusted earnings of 12 cents a share slumped 50% year over year, missing the Zacks Consensus estimate of 20 cents. Moreover, the company's adjusted operating margin contracted 240 basis points to 6.1%, primarily attributable to revenue decline related to fixed expenses and a negative foreign currency translation.

The company's dismal results triggered a downtrend in the Zacks Consensus Estimate, as analysts become less constructive on the stock's future performance. The Zacks Consensus Estimate for fiscal 2014 and 2015 fell 9.9% to $1.01 and 5.9% to $1.11, respectively in the past 7 days.  

Other Stocks That Warrant a Look

Other better-ranked retail stocks that look promising and are expected to continue with their upbeat performance include Rite Aid Corp. ( RAD ) and Bon-Ton Stores Inc. ( BONT ), both carrying a Zacks Rank #1 (Strong Buy).

AVON PRODS INC (AVP): Free Stock Analysis Report

BON-TON STORES (BONT): Get Free Report

INTER PARFUMS (IPAR): Free Stock Analysis Report

RITE AID CORP (RAD): Free Stock Analysis Report

To read this article on Zacks.com click here.

Zacks Investment Research

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

This article appears in: Investing , Business , Stocks

Referenced Stocks: AVP , BONT , IPAR , RAD



More from Zacks.com:

Related Videos



Most Active by Volume

  • $16.94 ▼ 0.53%
  • $8.20 ▼ 7.13%
  • $3.68 ▼ 1.34%
  • $18.32 ▼ 3.93%
  • $4.92 ▲ 1.44%
  • $30.04 ▼ 1.69%
  • $7.13 ▼ 14.30%
  • $5.61 ▼ 4.10%
As of 7/6/2015, 04:15 PM

Find a Credit Card

Select a credit card product by:
Select an offer:
Data Provided by BankRate.com