Avon Loss Widens, Revenue Declines

Avon Products Inc., in the process of remaking itself and spinning off its flagging North American business, said its fourth-quarter loss edged deeper as results fell short of analysts' expectations.

In December, the beauty-products maker reached a deal in which Cerberus Capital Management LP would inject $435 million into Avon and carve out the North American business into a separate company with another $170 million investment.

Chief Executive Sheri McCoy, who has been attempting a turnaround of the beleaguered company, said key local markets drove steady improvement in overall performance during the year. Ms. McCoy noted Thursday that the partnership with Cerberus and Avon's turnaround plans remain on track.

For the fourth quarter, Avon reported a loss of $333.4 million, or 76 cents a share, compared with a loss of $330.7 million, or 75 cents a share, a year earlier. Revenue dropped 20% to $1.61 billion. Avon said revenue increased 3% excluding currency swings and the sale of its Liz Earle business.

On an adjusted, continuing-operations basis, which levels out the bottom line for the divestiture of the North American business and other items, Avon broke even, compared with a profit of 21 cents in the fourth quarter of 2014.

Analysts polled by Thomson Reuters had forecast adjusted earnings of 8 cents a share on $1.82 billion in revenue.

Shares of Avon, down 20% this year through Wednesday's close, declined 4.6% to $3.10 in premarket trading.

Avon sells cosmetics, perfumes and accessories through a network of roughly 6 million representatives world-wide. The number of representatives actively selling products rose 2% in the recent quarter from a year earlier, as increases in Europe, the Middle East and Africa were partially offset by declines in the Latin America markets experiencing high inflation.

Gross margin fell 280 basis points to 58.7%.

The company noted that the North America business, in the process of being split off, saw higher operating profit for the full-year 2015 despite lower revenue "as a result of significant cost savings."

Write to Anne Steele at [e-mail]

(END) Dow Jones Newswires

February 11, 2016 09:05 ET (14:05 GMT)

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