Beauty and related products maker Avon Products, Inc. (AVP) reported Tuesday a net loss in its first quarter, compared to last year's profit, hurt by higher one-time charges. Adjusted earnings, however, topped Street estimates on margin growth. Shares were trading nearly 8 percent higher in pre-market.
Chief Executive Officer Sheri McCoy said, "Our first-quarter results reflect continued signs of stabilization, including early progress in our cost reduction efforts. I'm pleased with the performance of our Latin America and Europe, Middle East & Africa regions, particularly in Brazil and Russia. As for our other markets, there remains work to be done, particularly in the U.S."
In its first quarter, net loss attributable to Avon was $13.7 million or $0.03 per share, compared with profit of $26.5 million or $0.06 per share last year.
The latest-quarter results included CTI restructuring charges of $0.03 per share, charges related to Venezuela of $0.15 per share and a loss on extinguishment of debt of $0.11 per share.
Adjusted profit for the quarter, which excluded items, was $111.5 million or $0.26 per share, compared to last year's $45.7 million or $0.10 per share.
On average, 15 analysts polled by Thomson Reuters expected the company to report profit of $0.14 per share for the quarter. Analysts' estimates typically exclude special items.
Total revenue, meanwhile, decreased 4 percent to $2.48 billion from $2.58 billion last year. Analysts expected revenue of $2.51 billion for the quarter. On a constant currency basis, revenues were relatively unchanged.
Total units decreased 3 percent and price/mix increased 3 percent during the quarter. Active Representatives increased 1 percent.
Segment-wise, Avon Beauty sales declined 5 percent. Fragrance grew 1 percent, while personal care, color and skincare declined 3 percent, 6 percent and 12 percent, respectively.
Among regions, Latin America generated higher revenues in constant dollar, primarily due to an increase in Active Representatives as well as higher average order.
Meanwhile, North America revenue declined 15 percent, primarily due to a decrease in Active Representatives and, to a lesser extent, lower average order. The region continues to be challenged by disruption in the field due to redistricting in the U.S., as well as other operational challenges.
Revenue in China declined 30 percent, primarily due to declines in unit sales and the transition to a retail incentive model.
The company's first-quarter adjusted gross margin was 62.5 percent, 160 basis points higher than last year, driven by lower freight costs, as well as lower material costs, including the benefits from productivity initiatives.
Separately, Avon declared a regular quarterly dividend of $0.06 per share, payable June 3 to shareholders of record on May 14.
In pre-market activity, Avon shares were trading higher by $1.76 or 7.91 percent, to trade at $24.
by RTT Staff Writer
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