The global beauty company,
Avon Products Inc
) once again posted strong results for the second consecutive
quarter. The company's adjusted earnings of 29 cents per share
for the second quarter of 2013 surged over 38% from the year-ago
quarter's earnings of 21 cents. Additionally, the company's
earnings surpassed the Zacks Consensus Estimate of 26 cents per
Moreover, on a reported basis, the company's earnings came at
19 cents per share compared with 16 cents in the year-ago
Total revenue for the quarter declined 2% year over year to
$2,508.9 million compared with $2,558.2 million a year ago.
However, on a constant currency basis, total revenue grew 2% year
over year primarily driven by an increase in average order.
Further, total revenue missed the Zacks Consensus Estimate of
$2,573.0 million. During the quarter, the company registered an
increase of 2% in price/mix, while active representatives and
total units remained almost flat.
Avon, which competes with
Inter Parfums Inc.
Nu Skin Enterprises Inc.
), registered a 4% revenue decline in its Beauty Products and
Fashion categories each. However, sales at the company's Home
category business improved 13%. The decline in Beauty revenues
was primarily due to weak performance in its fragrance, color,
skincare and personal care products.
Adjusted gross margin of this Zacks Rank #3 (Hold) company
expanded 30 basis points year over year to 63.3%, on account of
lower freight costs, partially offset by unfavorable foreign
currency exchange rates. Adjusted operating margin improved 50
basis points to 9.5%, attributable to higher gross margin,
reduced advertisement expenses and lower professional fees.
In the quarter, Avon's revenues in
inched up 1% year over year to $1,252.1 million on a
constant-dollar basis. On a currency neutral basis, revenue at
Brazil and Mexico rose 4% each, while sales in Venezuela
increased 15%. Units sold were up 1% during the quarter, while
Active Representatives grew 2% year over year.
, sales skidded 12% year over year to $380.3 million, mainly due
to a fall in Active Representatives. Units sold for the region
waned 10% year over year, while Active Representatives slipped
The beauty product manufacturer's revenue in
Europe, the Middle East and Africa
inched up 2% year over year to $678.4 million, primarily due to
improvements in units sold and Active Representatives. Regional
breakup shows that sales escalated 8% in Russia and 9% in Turkey
on a constant-dollar basis, while revenues in UK and South Africa
declined 5% and 11%, respectively. Avon registered a 3% increase
in Active Representatives, while units sold were up by 6% during
division's revenue dipped 9% to $198.1 million. The region marked
an 11% decline in Active Representatives and a 12% fall in units
sold. Country wise, the region recorded a 28% and 2% revenue
decline in China and Philippines, respectively on a
Other Financial Details
The leading global beauty company exited the quarter with cash
and cash equivalents of $873.2 million, long-term debt (excluding
current maturities) of $2,634.8 million, and shareholders' equity
of $1,116.3 million.
Moreover, prior to the earnings release, the company announced
a quarterly dividend of 6 cents, payable on Sep 3, 2013 to
shareholders of record as on Aug 15.
Headquartered in New York City, Avon directly sells cosmetics,
fragrances, toiletries, jewelry, and accessories. The company
markets globally through more than 6.2 million independent sales
representatives and is the world's largest direct seller of
AVON PRODS INC (AVP): Free Stock Analysis
COTY INC-A (COTY): Free Stock Analysis Report
INTER PARFUMS (IPAR): Free Stock Analysis
NU SKIN ENTERP (NUS): Free Stock Analysis
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