Most Popular in:

Financials

Email This Item! Print This Item!

Avon's Revenue Down 2% for Q2 2013

Posted: August 1, 2013

Avon Products, Inc. reported second quarter 2013 results. "Our second quarter results reflect continued progress in stabilizing Avon's business," said Sheri McCoy, Avon's CEO. "There is still significant work to be done to deliver sustainable performance in the near and longer term, but I'm pleased with the progress to date. We will succeed by continuing our focus on better serving Avon representatives, creating a compelling consumer proposition, and simplifying our business to drive both top and bottom line improvements."

For the second quarter of 2013, total revenue of $2.5 billion decreased 2% compared to second quarter 2012, but increased 2% in constant dollars, primarily due to an increase in average order, which partially benefited from inflation in Latin America. Active representatives and total units were relatively unchanged and price/mix increased 2% during the quarter. Avon beauty sales declined 4%, or were relatively unchanged in constant dollars. Fashion and home sales were up 2%, or 5% in constant dollars. Second quarter 2013's net income from continuing operations was $85 million, or $.19 per diluted share. Second quarter 2013's adjusted net income from continuing operations was $127 million, or $.29 per diluted share.

For Latin America, Avon recorded total revenue of $1.25 billion, with growth driven by the positive impact of the timing of the Easter holiday, higher average order and an increase in active representatives. Brazil revenue was down 1%, or up 4% in constant dollars, primarily driven by an increase in active representatives, partially offset by lower average order. Constant-dollar revenue growth was driven by fashion and home, while beauty sales were relatively unchanged. Mexico revenue was up 12%, or 4% in constant dollars, primarily driven by the positive impact of the timing of the Easter holiday, as well as an increase in active representatives. Venezuela revenue was down 22%, or up 15% in constant dollars, primarily due to higher average order, benefiting from the inflationary impact on pricing as well as an increase in units sold. The positive impact of the timing of the Easter holiday also contributed to the revenue growth. Higher average order was partially offset by a decrease in active representatives, which was impacted by continued economic and political instability.

For Europe, the Middle East and Africa, second-quarter constant-dollar revenue growth was driven both by an increase in active representatives and higher average order, for $678.4 million total revenue. Russia revenue was up 6%, or 8% in constant dollars, primarily due to an increase in active representatives, as well as strong unit growth, while U.K. revenue was down 8%, or 5% in constant dollars, primarily due to a decrease in active representatives. Turkey revenue was up 6%, or 9% in constant dollars, primarily due to higher average order, partially offset by a decrease in active representatives, and South Africa revenue was down 6%, or up 11% in constant dollars, primarily due to higher average order, partially offset by a decrease in active representatives.

Second quarter North America revenue decline to $380.3 million was primarily due to a decrease in active representatives, as the Company continues to address challenges in the field and the overall consumer proposition. North America beauty sales declined 14%, driven primarily by skin care, while fashion and home sales declined 9%, on both a reported and constant-dollar basis.

For Asia Pacific, excluding China, total revenue was $198.1 million, as the second-quarter constant-dollar revenue decreased driven by the unfavorable results of Avon's China operations, as well as 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 China declined 27%, or 28% in constant dollars, primarily due to declines in unit sales and the transition to a retail incentive model during the third quarter of 2012. Revenue in the Philippines was relatively unchanged, or declined 2% in constant dollars, as a decrease in active representatives was primarily due to ongoing operational challenges in that market. This decrease in active representatives was partially offset by higher average order.

Click here for more information on this financial report from Avon.