Avon Raises Guidance, but Shares Fall

The cosmetics company falls short of analysts' consensus estimate for the fourth quarter.
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(AVP) - Get Report

shares fell sharply Monday after the home cosmetics company raised fourth quarter guidance, but came in below analysts' estimates.

The New York-based company said it now expects to earn $1.03 to $1.04 a share, including a gain of about 5 cents a share from a tax settlement. That compares with a Thomson First Call consensus estimate of $1 a share. The company's previous estimate was 96 cents a share, compared with 80 cents a share a year ago.

Avon forecast sales growth of 13%, the largest sales increase since 1994, but excluding exchange-rate factors now favoring the weak dollar, the company said sales gains would be reduced to "the high single digits."

The company now expects U.S. sales growth in the low- to mid-single digits, "somewhat lower than earlier projections due to unfilled demand for certain holiday non-beauty products and weaker promotions on existing fragrance brands."

Avon said all international regions should finish the year with strong performances in the quarter, in line with its previous expectations. Sales in Europe are forecast to increase at least 25%, with Latin America and Asia posting growth in the mid-teens.

For the full year, Avon said it now expects earnings in the range of $2.72 a share, vs. its previous estimate of $2.65 to $2.70 a share. That compares with a consensus estimate of $2.68 a share. In 2002, Avon earned $2.22 a share, which included a $25.2 million, or 10 cents a share, after-tax charge.

The company reports fourth quarter and full-year results on Feb. 3.

Recently, shares were down $3.43, or 5%, to $64.64.