(Updates to include other charges for the latest quarter,
updates stock price)
Avon Products Inc.'s (AVP) second-quarter earnings doubled on
prior-year restructuring costs while sales and margins rose
solidly.
Results beat analysts' expectations, sending the stock up 3.2%
in early trading to $30.47.
The direct beauty products seller recently announced plans to
buy closely held sterling-silver jewelry seller Silpada Designs
Inc. for $650 million. Avon has seen slower sales in North America
and the purchase of Silpada, which has a party-selling model, would
provide a contrast to its person-to-person sales model.
Avon posted a profit of $167.6 million, or 39 cents a share, up
from $82.9 million, or 19 cents a share, a year earlier. Excluding
restructuring and other charges, profit rose to 48 cents from 38
cents a share as revenue increased 8.1% to $2.68 billion.
Analysts surveyed by Thomson Reuters had predicted earnings of
45 cents a share on revenue of $2.66 billion.
Gross margin rose to 63.5% from 62.3%, or 2.6 percentage-point
growth excluding impacts from Venezuela's devaluation and other
charges. Meanwhile, overhead costs rose just 5.1%.
Beauty sales increased 9% during the quarter, with active
representatives up 5%. Volume increased 1%.
Total sales in Latin in America jumped 15% on a
constant-currency basis while sales in North America declined 7% on
a 4% drop in active representatives. Sales from China, where the
company has made changed to how it operates, decreased 32% on a 46%
plunge in volume.
-By Yogita Patel and Kevin Kingsbury, Dow Jones Newswires;
212-416-2262; yogita.patel@dowjones.com