Avon Backs Estimates on Strong Sales

The company says full-year earnings could exceed its earlier guidance.
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Beauty-product and makeup supplier

Avon

(AVP) - Get Report

backed its second-quarter and full-year earnings growth guidance, saying full-year earnings could even exceed estimates.

The company said strong beauty-product sales and international sales have contributed to the quarter's results.

Avon expects to report a second-quarter mid-single-digit rate increase over last year's comparable earnings of 64 cents a share. Last year's earnings included unusually high gains from currency hedging strategies that will not repeat in the current period, the company said. Analysts expect the company to earn 69 cents a share, on average, in the quarter.

Sales growth in the second quarter should be in line with the first quarter's sales increase of 7% in dollars and 12% in local currencies compared with the prior year, according to Avon. The company's total sales were $1.48 billion in the year-ago first quarter. Analysts expect $1.63 billion in second-quarter revenue. Revenue was $1.53 billion in the prior-year second quarter.

Beauty-products sales are expect to increase 11% to 13%, due in part to new-product launches. Second-quarter sales in Europe are expected to rise 30% in dollars, Avon said, and sales in Asia are forecast to rise in the low- to mid-single digits in dollars.

Avon said full-year earnings could exceed its $2.55-a-share guidance provided on April 25, if foreign exchange rates remain at or near current levels. Analysts expect $2.56 a share. The company earned $2.32 a share last year.

"We are very pleased with where we stand at this point in the year and we look for another year of double-digit growth in local-currency sales as well as earnings per share," said Andrea Jung, chief executive. "We are encouraged by the improving foreign currency picture, which could result in some upside for earnings if currencies remain at or near their present levels for the rest of the year."

New York Stock Exchange

-listed shares of the company were recently trading up 26 cents, or 0.4%, at $60.68.