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Avon Revenue Decreases 6% in 2013
Posted: February 13, 2014
Avon Products, Inc. reported fourth-quarter and full-year 2013 results. "Looking back at 2013, we made progress addressing tough legacy issues, identifying and beginning to resolve operational challenges, and rebuilding our management team. Although the second half of the year was impacted by both execution and macroeconomic factors, I'm pleased that we are making headway toward our financial goals and Avon's return to profitable growth," said Sheri McCoy, CEO, Avon Products, Inc. "While much work remains to be done, we continue to make progress toward building a better, simpler and more stable business."
Total revenue was $10 billion for fiscal 2013, decreased 6%, or 1% in constant dollars, compared to fiscal 2012. Total units decreased 5% and price/mix increased 4%. Active representatives were down 2% while average order increased 1%. Total beauty sales declined 7%, or 2% in constant dollars, while fashion and home sales declined 4%, or were up 1% in constant dollars. Operating profit was $427 million and operating margin was 4.3%, down 70 basis points from 2012.For the fourth quarter of 2013, total revenue of $2.7 billion decreased 10%, or 4% in constant dollars. Total units decreased 10% and price/mix was up 6% during the quarter. Active representatives were down 5% while average order increased 1%. Beauty sales declined 11%, or 4% in constant dollars.
For Latin America in Q4 2013, total revenue was $1.2 billion, a 7% decrease, and full year 2013 total revenue was $4.8 billion, down 3%. However, constant-dollar revenue for Q4 2013 was up 4%, primarily due to higher average order, which was partially offset by a decrease in active representatives. Higher average order benefited from pricing, including inflationary impacts, primarily in Argentina and Venezuela. Brazil revenue was down 3%, or up 6% in constant dollars, primarily due to higher average order, largely due to benefits from continued strength in fashion and home and pricing. Mexico revenue was down 15% in both reported and constant dollars, primarily driven by a decrease in active representatives and lower average order. The business was negatively impacted by executional challenges, coupled with the weaker economy. Venezuela revenue was down 12%, or up 29% in constant dollars, due to higher average order, partially offset by a decrease in active representatives. Average order benefited from the inflationary impact on pricing, which was partially offset by a decrease in units sold. The decline in active representatives was partially due to continued economic and political instability.
In Europe, the Middle East and Africa, Avon recorded Q4 2013 net revenue of $867.7 million, down 4%, and full year 2013 total revenue was $2.89 billion, down 1%. Also constant-dollar revenue for Q4 2013 was down 2%. This was due to both lower average order and a decrease in active representatives. Units declined due to merchandising and reduced discounting in several markets. Russia revenue was down 7%, or 3% in constant dollars, due to a decrease in active representatives and lower average order. U.K. revenue was down 5% in both reported and constant dollars, primarily due to a decrease in active representatives. Turkey revenue was down 9%, or up 3% in constant dollars, primarily due to higher average order, and South Africa revenue was down 12%, or up 2% in constant dollars, primarily due to an increase in active representatives, which was partially offset by lower average order.
North America saw total revenue for Q4 2013 of $370.8 million, a 21%; full year 2013 revenue was $1.45 billion, a 17% drop. Constant-dollar revenue for Q4 2013 also was down 20%. Fourth-quarter constant-dollar revenue decline was due to a decrease in active representatives and lower average order. The business continues to be impacted by executional challenges. North America beauty sales declined 25%, driven primarily by skin care and personal care, on both a reported and constant-dollar basis. Fashion and home sales declined 16%, or 15% in constant dollars.
And in Asia Pacific, total revenue for Q4 2013 was $192.4 million, a decrease of 22%, while full year 2013 revenue was down 16% to $757.9 million. In Q4 2013, constant-dollar revenue for the region dropped 18%. That decline was driven by the unfavorable results of China and a decrease in active representatives in the other Asia Pacific markets. The region's revenue was also negatively impacted by approximately one point as a result of the company's decision to exit the South Korea and Vietnam markets. Revenue in the Philippines was down 9%, or 4% in constant dollars, which includes approximately two points due to the significant typhoon. The revenue decline was primarily due to a decrease in active representatives, partially offset by higher average order. Revenue in China was down 48%, or 50% in constant dollars, primarily due to declines in unit sales. Revenue was negatively impacted by a decline in the number of beauty boutiques, as well as the company's continued actions intended to reduce inventory levels held by beauty boutiques.