Second-quarter net income fell 33% to $82.5 million as the perfume and beauty retailer was hit hard by softness in fragrance and nailcare segments and an aggressively promotional holiday season.
In the three months to December, per-share earnings of 28 cents a share were a penny shy of consensus, according to analysts surveyed by Thomson Reuters.
Revenue of $1.32 billion, though 4% lower than a year earlier, beat estimates by $20 million."We faced a challenging second quarter, as expected. U.S. market softness particularly in the mass fragrance and nail categories, and the high level of promotional activity through the holiday season, have impacted our performance in mature markets," said CEO Michele Scannavini in a statement. Emerging market growth showed resilience, increasing 6% over the quarter. "On a more positive note, our investment in the emerging markets is starting to yield positive results, with solid growth driven by Brazil, Southeast Asia, and South Africa," said Scannavini. The board approved the repurchase of up to $200 million of common shares. Investors might have been expecting worse. By midafternoon, shares had surged 7.5% to $14.75. Also See: Avon Products Reports Quarterly Results