Despite a value-conscious branding effort that should presumably resonate in troubled times, Avon Products (AVP) became one of the few cosmetic companies to miss Wall Street's quarterly expectations when it announced its earnings today.
The company reported a 36% decline in first-quarter earnings to $117.3 million, or 27 cents per share, from $184.7 million, or 43 cents per share, a year earlier. Analysts expected earnings of 33 cents a share.
Results included a 2 cent-a-share restructuring charge.
Revenue fell 13% to $2.18 billion, hurt by restructuring costs and the stronger dollar, which cut into international sales. Avon has a strong presence overseas.On the plus side, Avon's active representatives have grown 7% in the quarter, as more people are on the hunt to make extra cash. Avon announced that it is embarking on a restructuring plan that includes salary freezes, job cuts and moving some jobs overseas to cut costs. Avon also said it is making a more conscious effort to offer lower-priced items as consumers trade down on beauty care. "We are offering consumers an increased assortment of 'smart value' products -- great quality products at affordable price points -- which contributed to beauty unit growth of 2% in the quarter," Chief Executive Andrea Jung said in a statement. On Monday, rival Estee Lauder (EL) surprised investors with robust earnings, buoyed by strong sales in Asia. Revlon (REV) and Bare Escentuals (BARE) also beat expectations last week. Revlon reported a profit of $12.7 million, or 25 cents a share, compared with a net loss of $2.5 million, or 5 cents, in the year-ago quarter, while Bare Escentuals surpassed analysts' expectations by 4 cents.
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