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Drops in Active Reps for Avon Hurts Its 2014 Q1 Results

Posted: May 1, 2014

Avon Products, Inc. reported first-quarter 2014 results. "As I look at our first-quarter results, I'm not satisfied with our performance, but I'm encouraged by our progress," said Sheri McCoy, CEO of Avon Products, Inc. "We saw significant headwinds that further impacted our financial results, particularly in EMEA. However, we continue to stay the course on our plans to return Avon to sustainable, profitable growth."

For the first quarter of 2014, total revenue of $2.2 billion decreased 11% compared to first quarter 2013, or 3% in constant dollars. Total units decreased 6% and price/mix was up 3% during the quarter. Active representatives were down 4%, while average order increased 1%. Beauty sales declined 12%, or 4% in constant dollars. Fashion and home sales declined 9%, or 1% in constant dollars.

In Latin America, revenue was $1.06 billion for the first quarter of 2014, down 7% versus the first quarter of 2013. Active representatives also were down 1% in the region. However, first-quarter constant-dollar revenue growth was primarily due to higher average order, which benefited from pricing, including inflationary impacts, primarily in Venezuela, partially offset by a decrease in active representatives. Brazil revenue was down 10%, or up 5% in constant dollars, primarily due to higher average order, and Mexico revenue was down 12%, or 8% in constant dollars, primarily driven by a decrease in active representatives and lower average order. Venezuela revenue was up 27%, or 54% in constant dollars, primarily due to higher average order, benefiting from the inflationary impact on pricing that was partially offset by a decrease in units sold.

For Europe, the Middle East and Africa (EMEA), revenue was $657.8 million for the quarter, down 11% compared to the same period in 2013. Active representatives dropped 6% as well. First-quarter constant-dollar revenue declined primarily due to a decrease in active representatives. In Russia, revenue was down 23%, or 11% in constant dollars, primarily due to a decrease in active representatives, negatively impacted by a slowing economy, including the impact of geopolitical uncertainties. U.K. revenue was up 1%, or down 6% in constant dollars, primarily due to a decrease in active representatives, as well as lower average order. Turkey revenue was down 22%, or 3% in constant dollars, primarily due to a decrease in active representatives, and South Africa revenue was down 16%, or up 1% in constant dollars, primarily due to an increase in active representatives, partially offset by lower average order. The results of South Africa also were negatively impacted by a postal strike during the first quarter of 2014.

North America saw revenue of $295.7 million for the first quarter 2014, a 22% drop from first quarter 2013, and active representatives dropped 18%. First-quarter constant-dollar revenue decline was primarily due to a decrease in active representatives and a decline in units sold, and North America constant-dollar beauty sales and fashion and home sales each declined 21%.

For Asia-Pacific, the revenue for first quarter 2014 was $166.4 million, a 17% decrease from first quarter 2013. Active representative decreased by 8%. First-quarter constant-dollar revenue was primarily driven by a decline in China, and revenue in the Philippines was down 10%, or 1% in constant dollars, due to a decrease in active representatives, partially offset by higher average order. Revenue in China was down 41%, or 42% in constant dollars, primarily due to a decline in the number of beauty boutiques, which negatively impacted unit sales.

More information on Avon’s first quarter 2014 results is available by clicking here.