Avon Loss Widens, Revenue Declines
12 February 2016 - 1:20AM
Dow Jones News
Avon Products Inc., in the process of remaking itself and
spinning off its flagging North American business, said its
fourth-quarter loss edged deeper as results fell short of analysts'
expectations.
In December, the beauty-products maker reached a deal in which
Cerberus Capital Management LP would inject $435 million into Avon
and carve out the North American business into a separate company
with another $170 million investment.
Chief Executive Sheri McCoy, who has been attempting a
turnaround of the beleaguered company, said key local markets drove
steady improvement in overall performance during the year. Ms.
McCoy noted Thursday that the partnership with Cerberus and Avon's
turnaround plans remain on track.
For the fourth quarter, Avon reported a loss of $333.4 million,
or 76 cents a share, compared with a loss of $330.7 million, or 75
cents a share, a year earlier. Revenue dropped 20% to $1.61
billion. Avon said revenue increased 3% excluding currency swings
and the sale of its Liz Earle business.
On an adjusted, continuing-operations basis, which levels out
the bottom line for the divestiture of the North American business
and other items, Avon broke even, compared with a profit of 21
cents in the fourth quarter of 2014.
Analysts polled by Thomson Reuters had forecast adjusted
earnings of 8 cents a share on $1.82 billion in revenue.
Shares of Avon, down 20% this year through Wednesday's close,
declined 4.6% to $3.10 in premarket trading.
Avon sells cosmetics, perfumes and accessories through a network
of roughly 6 million representatives world-wide. The number of
representatives actively selling products rose 2% in the recent
quarter from a year earlier, as increases in Europe, the Middle
East and Africa were partially offset by declines in the Latin
America markets experiencing high inflation.
Gross margin fell 280 basis points to 58.7%.
The company noted that the North America business, in the
process of being split off, saw higher operating profit for the
full-year 2015 despite lower revenue "as a result of significant
cost savings."
Write to Anne Steele at Anne.Steele@wsj.com
(END) Dow Jones Newswires
February 11, 2016 09:05 ET (14:05 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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