Aug 1, 2010
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Beauty companies' earnings beat expectations

Aug 1, 2010

CHICAGO, July 29 (Reuters) - Higher prices and strong sales for do-it-yourself beauty products helped Avon Products Inc (AVP.N) and Sally Beauty Holdings Inc (SBH.N) post better-than-expected earnings and send their shares higher.

Avon also reported an 8 percent revenue increase and lower administrative costs for the second quarter.

The company, whose cosmetics and skincare brands include Avon Color, Avon Naturals and Skin-So-Soft, posted earnings of 48 cents per share, excluding items. Analysts on average had forecast 45 cents, according to Thomson Reuters I/B/E/S.

Revenue of $2.68 billion beat analysts' expectations of $2.66 billion. The company said sales increased in all categories, particularly perfumes and color cosmetics such as hair dyes.

Sally Beauty also beat profit expectations. It said it had earned 22 cents a share, while analysts' were expecting 21 cents.

The company said increasing its proportion of private brands and direct sourcing had led to higher gross margins.

Revenue increased 10 percent to $743 million, exceeding analysts' forecasts of $737.5 million.

Avon shares were up 5.1 percent at $31.03 in morning trading, while Sally Beauty gained 1.2 percent to $9.14. (Reporting by Emily Stephenson, Vidya Lakshmi in Bangalore; Editing by Lisa Von Ahn)

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