Avon Products, Inc. (NYSE:AVP) reported its first quarter earnings today with revenue totaling at $2.5 billion, which was 4 percent below the previous year’s quarter. Revenue in dollar terms was almost flat. Total units for the company fell 3 percent while price/mix was up 3 percent during the quarter.
For the first quarter, company posted a net loss of $13 million, or a loss of $.03 per share while, on an adjusted basis, Avon posted a net income of 112 million, or $.26 per share. The 32 percent devaluation of the Venezuelan currency adversely affected the company’s earnings.
“Our first-quarter results reflect continued signs of stabilization, including early progress in our cost reduction efforts,” said Sheri McCoy, Chief Executive Officer.
Avon Products, Inc. (NYSE:AVP) beauty sales fell 5 percent or 1 percent in constant dollars. Avon’s fragrance sales were up 1 percent while personal care, color and skincare reported a decline of 3 percent, 6 percent and 12 percent.
The gross margin for the company stood at 62.1 percent, on adjusted basis it was 62.5 percent, which was 160 basis points more from the prior-year quarter. The improved margin was mainly due to lower freight costs, lower material costs along with gains from productivity initiatives. During the quarter, the company prepaid the $535 million of outstanding private notes plus a make-whole premium. Avon Products, Inc. (NYSE:AVP) also paid back $380 million for the outstanding term loan principal.
Geography wise, revenue from Brazil was down 2 percent or up 11 percent in constant dollars terms owing to increases in both average order and Active Representatives. Revenues from Mexico were up 6 percent or 3 percent in constant dollars backed by an increase in Active Representatives. Revenues from Venezuela fell 15 percent, but on a constant dollar basis it was up 3 percent as average order gained from inflationary impact on pricing. U.K. revenue decreased 9 percent owing to fall in Active Representatives. Revenue from Turkey was down 2 percent while, from South America, revenues were down 11 percent. From North America, revenues were down 15 percent owing to certain operational challenges. Revenues from China fell 30 percent due to a decline in unit sales and introduction of a retail incentive model. From the Philippines, revenue was down 6 percent on a constant dollar basis primarily due to weaker service levels.
The beauty company will hold a conference call at 9:00 A.M. today to discuss the quarterly results.