AVP Avon Products Inc

By Paul Ziobro and Anne Steele 

Avon Products Inc. shares plunged Thursday as losses continued to pile up at the struggling beauty company, where quarterly sales fell for the 17th consecutive period.

The latest results raise pressure on Chief Executive Sheri McCoy to execute on her latest turnaround plan. The company is in the midst of spinning off its flagging North American business through a complex transaction with private-equity firm Cerberus Capital Management LP and fixing parts of its business around the globe, where it is struggling with the effects of the stronger dollar and years of stumbles in key markets like Brazil.

The latest results fell short of analyst expectations, pushing shares down 17% to $2.71 in midday Thursday trading. Avon shares have now fallen more than 30% in 2016 and by more than two-thirds over the last year.

One of the main solutions to Avon's struggles is the deal with Cerberus announced last month, where the firm would inject $435 million into Avon and carve out the North American business into a separate company with another $170 million investment. That transaction is set to close in the next couple of months. Avon ended the year with $687 million in cash, down about 25% from where it started 2015.

Beyond that, Avon hopes to increase the number of sales representatives it has globally and focus on its most promising markets like Brazil and Russia. It is planning to pay for investments in its business with $350 million in costs cuts, including $70 million expected this year.

Avon must try to execute that through a volatile currency environment that has continued to pose challenges to the global company. In Brazil and Russia, Avon is raising prices to keep up with inflation, but it isn't enough to keep profit margins from their downward spiral.

"We have taken significant pricing and we'll continue to do that moving forward," Ms. McCoy said on Thursday's earnings call.

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. The company said revenue would have been up 3% in constant currency and excluding 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.

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.

Avon didn't provide detailed guidance for the coming year but did project that profit would suffer more in the first half due to ongoing foreign-exchange pressure. The cost savings also aren't expected to materialize until the second half of the year.

Write to Paul Ziobro at Paul.Ziobro@wsj.com and Anne Steele at Anne.Steele@wsj.com

(END) Dow Jones Newswires

February 11, 2016 12:33 ET (17:33 GMT)

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