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Avon Sees Decreases in Q2 2014 Financial Report

Posted: July 31, 2014

Avon Products, Inc. reported second-quarter 2014 results. "As anticipated, our second-quarter results were tough. While Avon's turnaround remains challenging, we are putting the people and processes in place to lay the foundation for returning Avon to sustainable, profitable growth," said Sheri McCoy, CEO of Avon Products, Inc. "As we move to the second half of the year, we continue to expect improved performance."

For the second quarter of 2014, total revenue of $2.2 billion decreased 13%, or 3% in constant dollars. Total units decreased 6% and price/mix was up 3% during the quarter. Active representatives were down 6%, while average order increased 3%. Beauty sales declined 13%, or 3% in constant dollars.

In Latin America, total revenue was $1.05 billion, down 16% compared to Q2 2013, but constant dollar revenue was up 1%. Second-quarter constant-dollar revenue growth was favorably impacted by approximately 1 point as a result of the recognition of Value Added Tax (VAT) credits in Brazil. In addition, higher average order was offset by a decrease in active representatives, down 6%. Brazil revenue was down 5%, or up 3% in constant dollars, favorably impacted by approximately 2 points as a result of the VAT credits .Brazil's constant-dollar revenue was pressured by demand forecasting issues and disruption from the World Cup. Constant-dollar beauty sales were relatively unchanged. Mexico revenue was down 16%, or 12% in constant dollars, primarily due to a decrease in active representatives, and Venezuela revenue was down 84%, or up 31% in constant dollars, primarily due to higher average order, which benefited from the inflationary impact on pricing that was partially offset by a decrease in units sold.

For Europe, the Middle East and Africa, total revenue for the quarter was down 3% compared to Q2 2013 to $658.1 million. Second-quarter constant-dollar revenue was relatively unchanged. Constant-dollar revenue was negatively impacted by approximately 1 point as a result of the closure of the France business. In addition, higher average order was partially offset by a decrease in active representatives. In Russia, revenue was down 13%, or 4% in constant dollars, primarily due to a decrease in active representatives, which was partially offset by higher average order. Russia continued to be negatively impacted by a difficult economy, including the impact of geopolitical uncertainties. U.K. revenue was up 11%, or 1% in constant dollars, primarily due to higher average order, partially offset by a decrease in active representatives, and Turkey revenue was down 13%, or relatively unchanged in constant dollars, as an increase in active representatives was offset by lower average order. Also, South Africa revenue was down 2%, or up 9% in constant dollars, primarily due to higher average order.

For North America, revenue for the quarter was $304.1 million, down 20%. Second-quarter constant-dollar revenue declined primarily due to a decrease in active representatives and a decline in units sold. North America constant-dollar beauty sales declined 20%.

And for the Asia-Pacific region, total Q2 2014 revenue was down 13% compared to Q2 2013, reaching $172.6 million. Second-quarter constant-dollar revenue declined due to declines in most markets. Revenue in the Philippines was down 4%, or up 1% in constant dollars, primarily due to higher average order, partially offset by a decrease in active representatives. And revenue in China was down 31%, or 30% in constant dollars, primarily due to a decline in the number of beauty boutiques, which negatively impacted unit sales.

More information on the Q2 2014 financial results from Avon Products is available here.