Ads
By
Reuters
Published
Aug 1, 2014
Reading time
2 minutes
Download
Download the article
Print
Text size

Avon forecasts profitable North American business in 2015

By
Reuters
Published
Aug 1, 2014

Avon Products, a direct seller of beauty products, said its loss-making North American operations would turn profitable in 2015.

The company's shares rose as much as 8 percent in early trading on Thursday, making them one of the top percentage gainers on the S&P 500 index.


Avon has been trying to stem a decline in sales and profit since Chief Executive Sheri McCoy took control in 2012.

The cosmetics maker said in June it would cut about 600 jobs, including some in its North America unit, and said it expected restructuring efforts would result in annual savings of about $50-$55 million.

"In 2015, I anticipate that the North America business will return to profitability and no longer be dilutive to Avon's operating margin," McCoy said on a post-earnings conference call.

While Avon's second-quarter profit and sales both fell short of Wall Street's expectation, analysts' highlighted the fact that the company's sales rose in its largest market, Brazil.

"Overall, we believe the result is better than feared, particularly given concerns about World Cup disruptions in Brazil, the company's largest and most important growth market, and geopolitical unrest in Eastern Europe and Russia." Stifel analysts wrote in a research note.

Avon has had to battle tough competition in Russia, Brazil, and the United States, where rivals have piled on the pressure by offering lower prices.

Avon's revenue from Brazil rose 3 percent in constant currency in the second quarter ended June 30.

Net income attributable to Avon fell to $19 million, or 4 cents per share, in the second quarter ended June 30, from $31.9 million, or 7 cents per share, a year earlier.

Excluding items, the company earned 20 cents per share from continuing operations.

Revenue fell 13 percent to $2.19 billion.

Analysts on average expected the company to earn 21 cents per share on revenue of $2.23 billion, according to Thomson Reuters I/B/E/S.

Avon's shares were up 5 percent at $13.67 in morning trading on the New York Stock Exchange. They earlier touched a high of $14.06.
 

© Thomson Reuters 2024 All rights reserved.