Avon total revenue declines 22% to $1.7 billion in Q3
The cosmetics group reported a disappointing third quarter, hurt by declining sales in North America and Latin America, the divestiture of its natural skincare line Liz Earle, and a negative currency impact.
"This was a difficult quarter impacted by currency and other macro pressures, and our financial results were not where we would like them to be," said Sheri McCoy, Chief Executive Officer of Avon Products, Inc.
Total revenue for the quarter closed at the end of September dropped 22% to $1.7 billion (2% in constant dollars), as net loss reached $697 million, compared to a profit of $92 million for the third quarter of 2014. Adjusted net loss was $50 million, compared with adjusted net income of $99 million the prior year period.
Beauty sales decreased 6% due to declines in Latin America and North America, as the worldwide number of active representatives, who sell the cosmetics and perfumes to consumers, slipped 1% in the third quarter.
Revenue fell across all regions, with Latin America down 26% (Brazil revenue was down 42%), while Europe, the Middle East and Africa dropped 19%, and North America17% and Asia Pacific 16%.
Gross margin was 60.8%, down 110 basis points, while operating marging was 1.4% in the third quarter of 2015, down 740 basis points.
The cosmetics manufacturer said its performance was hit by a new Industrial Production Tax on cosmetics in Brazil as well as unfavourable currency impacts. It also changed the way it measured its Venezuelan operations, which resulted in an approximate loss of $6 million on operating profit.
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