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Avon Losses Widen as Quarterly Earnings Drop

BY DSN Staff | February 13, 2015 | read / Daily News

An increasingly strong dollar weakened fourth quarter sales at Avon Products Inc., and the beauty company expects to feel continued negative effects in 2015. On Thursday the global brand projected that 2015 revenue will decline by 12 percentage points due to currency rates.

Fourth quarter revenue decreased 12 percent to $2.34 billion; however, Avon reported modest 5 percent growth in constant dollars. Quarterly volume fell 3 percent, while the company’s average order increased 9 percent. Active representatives were down 4 percent.

Quarterly sales fell 14 percent in the Beauty category, with a 5 percent increase in constant dollars. Fashion & Home sales fell 13 percent and rose 1 percent in constant dollars.

North America continues to pose the greatest challenge for Avon. The New York-based company saw regional sales fall 12 percent in the quarter and 17 percent for the full year. Avon posted global revenue of $8.85 billion for 2014, an 11 percent decrease versus the prior year, or relatively unchanged in constant dollars. The company reported a net loss of $331 million, or 75 cents a share, broadening its $69 million loss in 2013. Excluding one-time costs, operating profit totaled $734 million.

“While progress against our financial goals in 2014 was slower than I would have liked, I am pleased with the sequential improvements we made in several key markets and categories in the second half of the year,” said CEO Sheri McCoy. “We have stronger management teams across our key markets and better discipline in executing consistently against Avon’s core processes.”

The company also reported declining sales outside the U.S., where it generates 88 percent of its sales. Revenue fell 7 percent in both EMEA (Europe, Middle East & Africa) and Asia Pacific. Latin America, Avon’s most profitable market, posted revenue of $4.24 billion for the year, a 12 percent decrease versus 2013.

The company says that it is working to mitigate the impact of foreign currency rates. In the meantime Avon has announced plans to pull out of Jamaica and other Caribbean islands, the Jamaica Observer reports. A Jan. 29 email from Pablo Muñoz, President of Avon North America, informed distributors that, effective Monday, they will no longer be able to place orders to the company. Avon’s regional managers were not available to provide comment on the contents of the email.

Posted in Daily News
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