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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Avon Products Inc | NYSE:AVP | NYSE | Common Stock |
Price Change | % Change | Share Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 5.60 | 0 | 01:00:00 |
FORM 8-K |
Avon Products, Inc. | ||||
(Exact name of registrant as specified in charter) | ||||
New York | 1-4881 | 13-0544597 | ||
(State or other jurisdiction of incorporation) | (Commission File Number) | (IRS Employer Identification No.) |
o | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
o | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
o | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
o | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
AVON PRODUCTS, INC. | |||||||||||||||
(Registrant) | |||||||||||||||
By | /s/ Robert Loughran | ||||||||||||||
Name: Robert Loughran | |||||||||||||||
Title: Group Vice President and Corporate Controller |
Exhibit | ||
No. | Description | |
99.1 | Press Release of Avon Products, Inc. dated November 4, 2015 |
Avon Reports Third-Quarter 2015 Results |
• | Revenue down 22% to $1.7 Billion; Declined 2% in Constant Dollars1 |
• | Operating Profit $23 Million; Adjusted1 Operating Profit $53 Million |
• | Operating Margin down 740 bps to 1.4%; Adjusted1 Operating Margin down 610 bps to 3.2% |
• | Diluted EPS of $(1.58) per share; Adjusted1 Diluted EPS of $(0.11) per share |
• | Total revenue for Avon Products, Inc. declined 22% to $1.7 billion, and declined 2% in constant dollars. Certain tax items in Brazil and the divestiture of Liz Earle impacted the year-over-year comparison in the third quarter. Excluding the impacts of these items, constant-dollar revenue would have grown approximately 3%2. Specifically, in Brazil, the recognition of Value Added Tax ("VAT") credits in 2014 that did not recur in 2015, and a new Industrial Production Tax ("IPI") on cosmetics in 2015 negatively impacted constant-dollar revenue by approximately 4 points. The divestiture of Liz Earle also negatively impacted constant-dollar revenue by approximately 1 point. |
◦ | Active Representatives were down 1% year-over-year, led by a continued decline in North America as well as in the Latin America markets experiencing high inflation (Venezuela and Argentina), partially offset by strong growth in Russia and solid growth in Brazil. Average order declined 1%, negatively impacted by approximately 4 points due to the VAT credits in 2014 and the IPI tax in 2015, as well as by approximately 1 point from the divestiture of Liz Earle discussed above. These negative impacts were partially offset by the benefit from price increases in Russia and Brazil, as well as by pricing actions taken in the Latin America markets experiencing high inflation. |
◦ | Total units decreased 6%, driven by declines in Latin America and North America. Price/mix was up 4% during the quarter, driven by increases across all regions. |
◦ | Beauty sales declined 23%, or 1% in constant dollars, negatively impacted by the IPI tax in 2015 discussed above as well as the divestiture of Liz Earle. Fashion & Home sales declined 15%, but increased 3% in constant dollars. |
• | Gross margin was 60.8%, down 110 basis points. Adjusted gross margin was 61.2%, down 80 basis points. These results were negatively impacted by approximately 100 basis points due to the VAT credits in 2014 and the IPI tax in 2015 discussed above. Excluding the impacts of these items, Adjusted gross margin would have increased 20 basis points2, as the benefits from price/mix and lower supply chain costs more than offset the negative impact of foreign exchange. |
• | Operating margin was 1.4% in the quarter, down 740 basis points. Adjusted operating margin was 3.2%, down 610 basis points. The results were negatively impacted by approximately 300 basis points due to the VAT credits in 2014 and the IPI tax in 2015 discussed above. Excluding the impacts of these items, Adjusted operating margin would have decreased 310 basis points2, which was primarily driven by approximately 410 basis points of unfavorable impact of foreign exchange. In addition, Adjusted operating margin was negatively impacted by 160 basis points due to higher expenses associated with employee incentive compensation plans, primarily due to the prior-year period, which included a benefit for the reversal of accruals. These unfavorable impacts were partially offset by continued benefits from cost savings initiatives as well as the favorable net impact of price/mix. |
• | The effective tax rate was negatively impacted by additional valuation allowances for deferred tax assets of approximately $665 million, which caused income taxes to be significantly in excess of income before taxes. The Adjusted effective tax rate in 2015 was negatively impacted by the country mix of earnings and the inability to recognize additional deferred tax assets in various jurisdictions related to our current-year operating results. The year-over-year difference in the Adjusted effective tax rate caused an estimated $0.11 per share negative impact on Adjusted earnings per share. The Adjusted effective tax rate is expected to be volatile on a quarterly basis due to the country mix of quarterly earnings. |
• | Net loss was $697 million, or a loss of $1.58 per diluted share, compared with net income of $92 million, or $0.21 per diluted share, for the third quarter of 2014. Adjusted net loss was $50 million, or a loss of $0.11 per diluted share, compared with adjusted net income of $99 million, or $0.23 per diluted share, for the third quarter of 2014. |
• | Foreign currency has impacted the Company’s financial results as shown in the table below: |
Approximate Impact of Foreign Currency | |||||||||||||||
Third-Quarter 2015 | YTD 2015 | ||||||||||||||
Estimated impact ($ in millions) | Estimated impact on diluted EPS | Estimated impact ($ in millions) | Estimated impact on diluted EPS | ||||||||||||
Total revenue | (20) pts | (19) pts | |||||||||||||
Adjusted operating profit - transaction | $ | (50 | ) | $ | (0.07 | ) | $ | (150 | ) | $ | (0.22 | ) | |||
Adjusted operating profit - translation | (55 | ) | (0.08 | ) | (200 | ) | (0.29 | ) | |||||||
Total Adjusted operating profit | $ | (105 | ) | $ | (0.15 | ) | $ | (350 | ) | $ | (0.51 | ) | |||
Adjusted operating margin | (410) bps | (420) bps | |||||||||||||
Revaluation of working capital | $ | (10 | ) | $ | (0.01 | ) | $ | (15 | ) | $ | (0.02 | ) | |||
Adjusted diluted EPS | $ | (0.16 | ) | $ | (0.53 | ) | |||||||||
• | Net cash used by operating activities was $97 million for the nine months ended September 30, 2015, compared with net cash provided of $126 million for the same period in 2014. Operating cash flow during 2015 was unfavorably impacted by lower cash-related earnings (including the unfavorable impact of foreign currency translation) and the $67 million payment to the SEC in connection with the FCPA settlement in the first quarter of 2015. These items were partially offset by lower operating tax (such as VAT and IPI) net payments, lower contributions to the U.S. pension plan and lower payments for employee incentive compensation. |
• | For the nine months ended September 30, 2015, there was $136 million of net cash provided by investing activities, a $222 million improvement over the prior year, primarily due to the Company’s sale of the Liz Earle business. |
• | Net cash used by financing activities was $358 million for the nine months ended September 30, 2015, or $190 million higher than the prior year, primarily due to the prepayment of $250 million principal amount of notes that were due in 2016. |
• | The Company recorded costs to implement restructuring within operating profit of less than $1 million before tax, primarily related to cost savings initiatives. |
• | Effective February 12, 2015, the Company began utilizing the SIMADI rate to remeasure its Venezuelan operations. The change to the SIMADI rate resulted in an approximate $6 million negative impact on operating profit. |
• | In July 2015, the Company sold Liz Earle and recorded a gain on sale of approximately $46 million before tax within income before taxes, and approximately $53 million after tax. |
• | As a result of the lump-sum payments made in 2015 to former employees who were vested and participated in the U.S. pension plan, the Company recorded a settlement charge within operating profit of $24 million before tax. |
• | In August 2015, the Company incurred a loss on extinguishment of debt of approximately $6 million before tax related to the prepayment of its notes that were due in 2016. |
• | The Company recorded a non-cash income tax charge of approximately $650 million as a result of establishing a valuation allowance for the full amount of the Company’s U.S. deferred tax assets, due to the impact of the continued strengthening of the U.S. dollar against currencies of some of its key markets and the associated effect on its tax planning strategies. In addition, the Company also recorded a non-cash income tax charge of approximately $15 million associated with valuation allowances for deferred tax assets outside of the U.S. |
THREE MONTHS ENDED SEPTEMBER 30, 2015 | |||||||||||||||
REGIONAL RESULTS | |||||||||||||||
($ in millions) | Revenue | Active Reps | Average Order C$ | Units Sold | Price/Mix C$ | ||||||||||
US $ | C$ | ||||||||||||||
Revenue & Performance Drivers | % var. vs 3Q14 | % var. vs 3Q14 | % var. vs 3Q14 | % var. vs 3Q14 | % var. vs 3Q14 | % var. vs 3Q14 | |||||||||
Latin America | $ | 790.9 | (26)% | 1% | (2)% | 3% | (6)% | 7% | |||||||
Europe, Middle East & Africa | 499.2 | (19) | 3 | 5 | (2) | — | 3 | ||||||||
North America | 230.6 | (17) | (15) | (13) | (2) | (24) | 9 | ||||||||
Asia Pacific | 146.2 | (16) | (8) | (2) | (6) | (10) | 2 | ||||||||
Total | $ | 1,666.9 | (22)% | (2)% | (1)% | (1)% | (6)% | 4% |
2015 GAAP | Adjusted Operating Profit (Loss) in US$ | Adjusted Operating Margin | |||||||||||||||||||
Operating Profit/Margin | Operating Profit (Loss) US$ | Operating Margin US$ | 2015 | 2014 | 2015 | 2014 | Change in US$ | Change in C$ | |||||||||||||
Latin America | $ | 34.7 | 4.4% | $ | 39.8 | $ | 144.5 | 5.0% | 13.5% | (850) bps | (600) bps | ||||||||||
Europe, Middle East & Africa | 48.1 | 9.6 | 46.5 | 55.1 | 9.3 | 8.9 | 40 | 190 | |||||||||||||
North America | (27.5 | ) | (11.9) | (7.7 | ) | (12.5 | ) | (3.3) | (4.5) | 120 | 100 | ||||||||||
Asia Pacific | 9.4 | 6.4 | 9.6 | 9.0 | 6.6 | 5.2 | 140 | 200 | |||||||||||||
Total from operations | 64.7 | 3.9 | 88.2 | 196.1 | 5.3 | 9.2 | (390) | (180) | |||||||||||||
Global and other | (41.7 | ) | — | (35.5 | ) | 1.7 | — | — | — | — | |||||||||||
Total | $ | 23.0 | 1.4% | $ | 52.7 | $ | 197.8 | 3.2% | 9.3% | (610) bps | (390) bps | ||||||||||
• | Latin America revenue was down 26%, but up 1% in constant dollars. Constant-dollar revenue was negatively impacted by approximately 8 points due to the VAT credits in 2014 and the IPI tax in 2015 discussed above. Excluding the impacts of these items, constant-dollar revenue would have grown approximately 9%2 due to higher average order, which benefited from the inflationary impact on pricing. Active Representatives declined, primarily due to declines in Venezuela and Argentina. |
◦ | Brazil revenue was down 42%, or down 10% in constant dollars. Constant-dollar revenue was negatively impacted by approximately 16 points due to the VAT credits in 2014 and the IPI tax in 2015 discussed above. Excluding the impacts of these items, constant-dollar revenue would have grown approximately 6%2, and was primarily driven by growth in Active Representatives. This market continues to be impacted by a difficult macroeconomic environment and high levels of competition. |
◦ | Mexico revenue was down 20%, but relatively unchanged in constant dollars, as higher average order was offset by a decline in Active Representatives. |
• | Europe, Middle East & Africa revenue was down 19%, but up 3% in constant dollars. Constant-dollar revenue was negatively impacted by approximately 3 points due to the divestiture of Liz Earle discussed above. Excluding the impact of this item, constant-dollar revenue would have grown approximately 6%2, and was driven by an increase in Active Representatives, led by strength in Russia. |
◦ | Russia revenue was down 29%, but up 22% in constant dollars, primarily driven by an increase in Active Representatives from sustained momentum in recruiting and retention. |
◦ | U.K. revenue was down 15%, or down 9% in constant dollars, primarily driven by a decline in Active Representatives, and to a lesser extent, lower average order. |
• | North America revenue was down 17%, or down 15% in constant dollars, primarily driven by a decline in Active Representatives. |
• | Asia Pacific revenue was down 16%, or down 8% in constant dollars, as growth in the Philippines was more than offset by declines in other Asia Pacific markets, led by China. |
• | Relatively unchanged constant-dollar revenue (which includes the negative impact of the Liz Earle divestiture); |
• | An approximate 19 point negative impact on reported revenue due to foreign currency translation; |
• | A 100 basis point decline in constant-dollar Adjusted operating margin; and |
• | A 300 basis point decline in Adjusted operating margin in reported dollars. |
Contacts: | |
INVESTORS: | MEDIA: |
Adam Zerfass | Brunswick Group |
(212) 282-5320 | Radina Russell |
investor.relations@avon.com | (212) 333-3810 |
rrussell@brunswickgroup.com |
Three Months Ended | Percent Change | Nine Months Ended | Percent Change | |||||||||||||||||||
September 30 | September 30 | |||||||||||||||||||||
2015 | 2014 | 2015 | 2014 | |||||||||||||||||||
Net sales | $ | 1,631.2 | $ | 2,059.0 | (21 | )% | $ | 5,183.5 | $ | 6,340.5 | (18 | )% | ||||||||||
Other revenue | 35.7 | 79.2 | 101.0 | 169.9 | ||||||||||||||||||
Total revenue | 1,666.9 | 2,138.2 | (22 | )% | 5,284.5 | 6,510.4 | (19 | )% | ||||||||||||||
Cost of sales | 652.7 | 813.9 | 2,073.4 | 2,580.0 | ||||||||||||||||||
Selling, general and administrative expenses | 991.2 | 1,136.4 | 3,133.9 | 3,700.2 | ||||||||||||||||||
Operating profit | 23.0 | 187.9 | (88 | )% | 77.2 | 230.2 | (66 | )% | ||||||||||||||
Interest expense | 30.1 | 27.5 | 89.7 | 83.7 | ||||||||||||||||||
Loss on extinguishment of debt | 5.5 | — | 5.5 | — | ||||||||||||||||||
Interest income | (3.6 | ) | (3.8 | ) | (9.7 | ) | (11.4 | ) | ||||||||||||||
Other expense, net | 29.4 | 19.8 | 48.3 | 88.8 | ||||||||||||||||||
Gain on sale of business | (46.2 | ) | — | (44.9 | ) | — | ||||||||||||||||
Total other expenses | 15.2 | 43.5 | 88.9 | 161.1 | ||||||||||||||||||
Income (loss) before taxes | 7.8 | 144.4 | * | (11.7 | ) | 69.1 | * | |||||||||||||||
Income taxes | (704.8 | ) | (52.4 | ) | (802.0 | ) | (124.4 | ) | ||||||||||||||
Net (loss) income | (697.0 | ) | 92.0 | * | (813.7 | ) | (55.3 | ) | * | |||||||||||||
Net income attributable to noncontrolling interests | — | (0.6 | ) | (1.8 | ) | (2.6 | ) | |||||||||||||||
Net (loss) income attributable to Avon | $ | (697.0 | ) | $ | 91.4 | * | $ | (815.5 | ) | $ | (57.9 | ) | * | |||||||||
(Loss) earnings per share:(3) | ||||||||||||||||||||||
Basic | $ | (1.58 | ) | $ | 0.21 | * | $ | (1.84 | ) | $ | (0.13 | ) | * | |||||||||
Diluted | (1.58 | ) | 0.21 | * | (1.84 | ) | (0.13 | ) | * | |||||||||||||
Weighted-average shares outstanding: | ||||||||||||||||||||||
Basic | 435.4 | 434.6 | 435.1 | 434.4 | ||||||||||||||||||
Diluted | 435.4 | 434.6 | 435.1 | 434.4 | ||||||||||||||||||
*Calculation not meaningful | ||||||||||||||||||||||
(3) Under the two-class method, earnings (loss) per share is calculated using net income (loss) allocable to common shares, which is derived by reducing net income (loss) by the income (loss) allocable to participating securities. Net (loss) income allocable to common shares used in the basic and diluted (loss) earnings per share calculation was $(685.9) and $90.6 for the three months ended September 30, 2015 and 2014, respectively. Net loss allocable to common shares used in the basic and diluted loss per share calculation was $(802.7) and $(56.3) for the nine months ended September 30, 2015 and 2014, respectively. |
September 30 | December 31 | |||||||
2015 | 2014 | |||||||
Assets | ||||||||
Current Assets | ||||||||
Cash and cash equivalents | $ | 587.4 | $ | 960.5 | ||||
Accounts receivable, net | 470.3 | 563.5 | ||||||
Inventories | 847.2 | 822.2 | ||||||
Prepaid expenses and other | 480.7 | 618.3 | ||||||
Total current assets | 2,385.6 | 2,964.5 | ||||||
Property, plant and equipment, at cost | 1,917.5 | 2,292.6 | ||||||
Less accumulated depreciation | (969.2 | ) | (1,061.6 | ) | ||||
Property, plant and equipment, net | 948.3 | 1,231.0 | ||||||
Goodwill | 99.9 | 249.3 | ||||||
Other assets | 340.9 | 1,052.0 | ||||||
Total assets | $ | 3,774.7 | $ | 5,496.8 | ||||
Liabilities and Shareholders’ (Deficit) Equity | ||||||||
Current Liabilities | ||||||||
Debt maturing within one year | $ | 117.2 | $ | 137.1 | ||||
Accounts payable | 815.2 | 895.4 | ||||||
Accrued compensation | 189.9 | 210.5 | ||||||
Other accrued liabilities | 424.6 | 598.8 | ||||||
Sales and taxes other than income | 149.4 | 168.6 | ||||||
Income taxes | 29.2 | 36.8 | ||||||
Total current liabilities | 1,725.5 | 2,047.2 | ||||||
Long-term debt | 2,196.3 | 2,463.9 | ||||||
Employee benefit plans | 473.5 | 501.8 | ||||||
Long-term income taxes | 62.3 | 77.8 | ||||||
Other liabilities | 85.5 | 100.8 | ||||||
Total liabilities | 4,543.1 | 5,191.5 | ||||||
Shareholders’ (Deficit) Equity | ||||||||
Common stock | 187.9 | 187.6 | ||||||
Additional paid-in-capital | 2,233.4 | 2,207.9 | ||||||
Retained earnings | 2,808.6 | 3,702.9 | ||||||
Accumulated other comprehensive loss | (1,417.4 | ) | (1,217.6 | ) | ||||
Treasury stock, at cost | (4,594.0 | ) | (4,591.0 | ) | ||||
Total Avon shareholders’ (deficit) equity | (781.5 | ) | 289.8 | |||||
Noncontrolling interests | 13.1 | 15.5 | ||||||
Total shareholders’ (deficit) equity | (768.4 | ) | 305.3 | |||||
Total liabilities and shareholders’ (deficit) equity | $ | 3,774.7 | $ | 5,496.8 | ||||
Nine Months Ended | ||||||||
September 30 | ||||||||
2015 | 2014 | |||||||
Cash Flows from Operating Activities | ||||||||
Net loss | $ | (813.7 | ) | $ | (55.3 | ) | ||
Adjustments to reconcile net loss to net cash (used) provided by operating activities: | ||||||||
Depreciation | 87.7 | 106.1 | ||||||
Amortization | 27.3 | 38.7 | ||||||
Provision for doubtful accounts | 114.2 | 146.9 | ||||||
Provision for obsolescence | 44.7 | 67.6 | ||||||
Share-based compensation | 28.9 | 28.4 | ||||||
Foreign exchange losses | 28.2 | 21.1 | ||||||
Deferred income taxes | 674.9 | (87.9 | ) | |||||
Charge for Venezuelan monetary assets and liabilities | (4.2 | ) | 53.7 | |||||
Charge for Venezuelan non-monetary assets | 101.7 | 115.7 | ||||||
Pre-tax gain on sale of business | (44.9 | ) | — | |||||
Other | 56.2 | 55.8 | ||||||
Changes in assets and liabilities: | ||||||||
Accounts receivable | (118.4 | ) | (120.0 | ) | ||||
Inventories | (198.9 | ) | (229.7 | ) | ||||
Prepaid expenses and other | (1.6 | ) | (56.3 | ) | ||||
Accounts payable and accrued liabilities | (47.9 | ) | 100.0 | |||||
Income and other taxes | 17.6 | 23.8 | ||||||
Noncurrent assets and liabilities | (48.5 | ) | (82.8 | ) | ||||
Net cash (used) provided by operating activities | (96.7 | ) | 125.8 | |||||
Cash Flows from Investing Activities | ||||||||
Capital expenditures | (61.8 | ) | (88.2 | ) | ||||
Disposal of assets | 5.7 | 7.0 | ||||||
Net proceeds from sale of business | 208.3 | — | ||||||
Purchases of investments | (25.0 | ) | (22.9 | ) | ||||
Proceeds from sale of investments | 9.0 | 18.4 | ||||||
Net cash provided (used) by investing activities | 136.2 | (85.7 | ) | |||||
Cash Flows from Financing Activities | ||||||||
Cash dividends | (80.7 | ) | (81.9 | ) | ||||
Debt, net (maturities of three months or less) | (10.3 | ) | (6.4 | ) | ||||
Proceeds from debt | 7.6 | — | ||||||
Repayment of debt | (265.6 | ) | (70.0 | ) | ||||
Net proceeds from exercise of stock options | — | 0.2 | ||||||
Repurchase of common stock | (3.0 | ) | (9.4 | ) | ||||
Other financing activities | (5.9 | ) | — | |||||
Net cash used by financing activities | (357.9 | ) | (167.5 | ) | ||||
Effect of exchange rate changes on cash and cash equivalents | (54.7 | ) | (154.5 | ) | ||||
Net decrease in cash and cash equivalents | (373.1 | ) | (281.9 | ) | ||||
Cash and cash equivalents at beginning of year | 960.5 | 1,107.9 | ||||||
Cash and cash equivalents at end of period | $ | 587.4 | $ | 826.0 | ||||
THREE MONTHS ENDED SEPTEMBER 30, 2015 | |||||||||||||||
REGIONAL RESULTS | |||||||||||||||
Revenue | Active Reps | Average Order C$ | Units Sold | Price/Mix C$ | |||||||||||
US $ | C$ | ||||||||||||||
Revenue & Performance Drivers | % var. vs 3Q14 | % var. vs 3Q14 | % var. vs 3Q14 | % var. vs 3Q14 | % var. vs 3Q14 | % var. vs 3Q14 | |||||||||
Latin America | $ | 790.9 | (26)% | 1% | (2)% | 3% | (6)% | 7% | |||||||
Europe, Middle East & Africa | 499.2 | (19) | 3 | 5 | (2) | — | 3 | ||||||||
North America | 230.6 | (17) | (15) | (13) | (2) | (24) | 9 | ||||||||
Asia Pacific | 146.2 | (16) | (8) | (2) | (6) | (10) | 2 | ||||||||
Total | $ | 1,666.9 | (22)% | (2)% | (1)% | (1)% | (6)% | 4% |
2015 GAAP | Adjusted Operating Profit (Loss) in US$ | Adjusted Operating Margin | |||||||||||||||||||
Operating Profit/Margin | Operating Profit (Loss) US$ | Operating Margin US$ | 2015 | 2014 | 2015 | 2014 | Change in US$ | Change in C$ | |||||||||||||
Latin America | $ | 34.7 | 4.4% | $ | 39.8 | $ | 144.5 | 5.0% | 13.5% | (850) bps | (600) bps | ||||||||||
Europe, Middle East & Africa | 48.1 | 9.6 | 46.5 | 55.1 | 9.3 | 8.9 | 40 | 190 | |||||||||||||
North America | (27.5 | ) | (11.9) | (7.7 | ) | (12.5 | ) | (3.3) | (4.5) | 120 | 100 | ||||||||||
Asia Pacific | 9.4 | 6.4 | 9.6 | 9.0 | 6.6 | 5.2 | 140 | 200 | |||||||||||||
Total from operations | 64.7 | 3.9 | 88.2 | 196.1 | 5.3 | 9.2 | (390) | (180) | |||||||||||||
Global and other | (41.7 | ) | — | (35.5 | ) | 1.7 | — | — | — | — | |||||||||||
Total | $ | 23.0 | 1.4% | $ | 52.7 | $ | 197.8 | 3.2% | 9.3% | (610) bps | (390) bps | ||||||||||
NINE MONTHS ENDED SEPTEMBER 30, 2015 | |||||||||||||||
REGIONAL RESULTS | |||||||||||||||
Revenue | Active Reps | Average Order C$ | Units Sold | Price/Mix C$ | |||||||||||
US $ | C$ | ||||||||||||||
Revenue & Performance Drivers | % var. vs 9M14 | % var. vs 9M14 | % var. vs 9M14 | % var. vs 9M14 | % var. vs 9M14 | % var. vs 9M14 | |||||||||
Latin America | $ | 2,481.2 | (22)% | 2% | (2)% | 4% | (4)% | 6% | |||||||
Europe, Middle East & Africa | 1,602.8 | (17) | 6 | 6 | — | 4 | 2 | ||||||||
North America | 731.3 | (17) | (15) | (15) | — | (23) | 8 | ||||||||
Asia Pacific | 469.2 | (9) | (3) | (3) | — | (6) | 3 | ||||||||
Total | $ | 5,284.5 | (19)% | —% | (1)% | 1% | (4)% | 4% |
2015 GAAP | Adjusted Operating Profit (Loss) in US$ | Adjusted Operating Margin | |||||||||||||||||||
Operating Profit/Margin | Operating Profit (Loss) US$ | Operating Margin US$ | 2015 | 2014 | 2015 | 2014 | Change in US$ | Change in C$ | |||||||||||||
Latin America | $ | 55.6 | 2.2% | $ | 175.9 | $ | 350.6 | 7.1% | 11.0% | (390) bps | (220) bps | ||||||||||
Europe, Middle East & Africa | 139.6 | 8.7 | 143.8 | 216.9 | 9.0 | 11.2 | (220) | (70) | |||||||||||||
North America | (46.9 | ) | (6.4) | (12.3 | ) | (15.3 | ) | (1.7) | (1.7) | — | — | ||||||||||
Asia Pacific | 26.8 | 5.7 | 37.0 | 18.5 | 7.9 | 3.6 | 430 | 450 | |||||||||||||
Total from operations | 175.1 | 3.3 | 344.4 | 570.7 | 6.5 | 8.8 | (230) | (60) | |||||||||||||
Global and other | (97.9 | ) | — | (80.3 | ) | (53.5 | ) | — | — | — | — | ||||||||||
Total | $ | 77.2 | 1.5% | $ | 264.1 | $ | 517.2 | 5.0% | 7.9% | (290) bps | (110) bps | ||||||||||
Consolidated | ||||||||||||
Three Months Ended September 30 | US$ | C$ | ||||||||||
2015 | 2014 | % var. vs 3Q14 | % var. vs 3Q14 | |||||||||
Beauty: | ||||||||||||
Skincare | $ | 470.5 | $ | 638.8 | (26)% | (6)% | ||||||
Fragrance | 412.3 | 507.2 | (19) | 4 | ||||||||
Color | 289.0 | 371.5 | (22) | — | ||||||||
Total Beauty | 1,171.8 | 1,517.5 | (23) | (1) | ||||||||
Fashion & Home: | ||||||||||||
Fashion (jewelry/watches/apparel/footwear/accessories/children's) | 285.0 | 331.4 | (14) | 2 | ||||||||
Home (gift & decorative products/housewares/entertainment & leisure/children's/nutrition) | 174.4 | 210.1 | (17) | 5 | ||||||||
Total Fashion & Home | 459.4 | 541.5 | (15) | 3 | ||||||||
Net sales | 1,631.2 | 2,059.0 | (21) | — | ||||||||
Other revenue | 35.7 | 79.2 | (55) | (44) | ||||||||
Total revenue | $ | 1,666.9 | $ | 2,138.2 | (22) | (2) | ||||||
Consolidated | ||||||||||||
Nine Months Ended September 30 | US$ | C$ | ||||||||||
2015 | 2014 | % var. vs 9M14 | % var. vs 9M14 | |||||||||
Beauty: | ||||||||||||
Skincare | $ | 1,552.0 | $ | 1,946.1 | (20)% | (1)% | ||||||
Fragrance | 1,264.4 | 1,524.4 | (17) | 5 | ||||||||
Color | 939.3 | 1,167.9 | (20) | — | ||||||||
Total Beauty | 3,755.7 | 4,638.4 | (19) | 1 | ||||||||
Fashion & Home: | ||||||||||||
Fashion (jewelry/watches/apparel/footwear/accessories/children's) | 881.6 | 1,035.2 | (15) | (1) | ||||||||
Home (gift & decorative products/housewares/entertainment & leisure/children's/nutrition) | 546.2 | 666.9 | (18) | 2 | ||||||||
Total Fashion & Home | 1,427.8 | 1,702.1 | (16) | — | ||||||||
Net sales | 5,183.5 | 6,340.5 | (18) | 1 | ||||||||
Other revenue | 101.0 | 169.9 | (41) | (31) | ||||||||
Total revenue | $ | 5,284.5 | $ | 6,510.4 | (19) | — | ||||||
THREE MONTHS ENDED SEPTEMBER 30, 2015 | ||||||||||||||||||||||||||||||||
Reported (GAAP) | CTI restructuring initiatives | Venezuelan special items | Liz Earle gain on sale | Pension settlement charge | Debt-related items | Special tax items | Adjusted (Non-GAAP) | |||||||||||||||||||||||||
Total revenue | $ | 1,666.9 | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | 1,666.9 | ||||||||||||||||
Cost of sales | 652.7 | — | 5.7 | — | — | — | — | 647.0 | ||||||||||||||||||||||||
Selling, general and administrative expenses | 991.2 | 0.2 | — | — | 23.8 | — | — | 967.2 | ||||||||||||||||||||||||
Operating profit | 23.0 | 0.2 | 5.7 | — | 23.8 | — | — | 52.7 | ||||||||||||||||||||||||
Income (loss) before taxes | 7.8 | 0.2 | 5.7 | (46.2 | ) | 23.8 | 5.5 | — | (3.2 | ) | ||||||||||||||||||||||
Income taxes | (704.8 | ) | 0.1 | — | (6.7 | ) | — | — | 664.9 | (46.5 | ) | |||||||||||||||||||||
Net (loss) income | $ | (697.0 | ) | $ | 0.3 | $ | 5.7 | $ | (52.9 | ) | $ | 23.8 | $ | 5.5 | $ | 664.9 | $ | (49.7 | ) | |||||||||||||
Diluted EPS | $ | (1.58 | ) | $ | — | $ | 0.01 | $ | (0.12 | ) | $ | 0.05 | $ | 0.01 | $ | 1.50 | $ | (0.11 | ) | |||||||||||||
Gross margin | 60.8 | % | — | 0.3 | — | — | — | — | 61.2 | % | ||||||||||||||||||||||
SG&A as a % of revenues | 59.5 | % | — | — | — | (1.4 | ) | — | — | 58.0 | % | |||||||||||||||||||||
Operating margin | 1.4 | % | — | 0.3 | — | 1.4 | — | — | 3.2 | % | ||||||||||||||||||||||
Effective tax rate | * | * | ||||||||||||||||||||||||||||||
SEGMENT OPERATING PROFIT (LOSS) | ||||||||||||||||||||||||||||||||
Latin America | $ | 34.7 | $ | (0.6 | ) | $ | 5.7 | $ | — | $ | — | $ | — | $ | — | $ | 39.8 | |||||||||||||||
Europe, Middle East & Africa | 48.1 | (1.6 | ) | — | — | — | — | — | 46.5 | |||||||||||||||||||||||
North America | (27.5 | ) | 2.2 | — | — | 17.6 | — | — | (7.7 | ) | ||||||||||||||||||||||
Asia Pacific | 9.4 | 0.2 | — | — | — | — | — | 9.6 | ||||||||||||||||||||||||
Global and other | (41.7 | ) | — | — | — | 6.2 | — | — | (35.5 | ) | ||||||||||||||||||||||
Total | $ | 23.0 | $ | 0.2 | $ | 5.7 | $ | — | $ | 23.8 | $ | — | $ | — | $ | 52.7 | ||||||||||||||||
SEGMENT OPERATING MARGIN | ||||||||||||||||||||||||||||||||
Latin America | 4.4 | % | (0.1 | ) | 0.7 | — | — | — | — | 5.0 | % | |||||||||||||||||||||
Europe, Middle East & Africa | 9.6 | % | (0.3 | ) | — | — | — | — | — | 9.3 | % | |||||||||||||||||||||
North America | (11.9 | )% | 1.0 | — | — | 7.6 | — | — | (3.3 | )% | ||||||||||||||||||||||
Asia Pacific | 6.4 | % | 0.1 | — | — | — | — | — | 6.6 | % | ||||||||||||||||||||||
Global and other | — | % | — | — | — | — | — | — | — | % | ||||||||||||||||||||||
Total | 1.4 | % | — | 0.3 | — | 1.4 | — | — | 3.2 | % |
NINE MONTHS ENDED SEPTEMBER 30, 2015 | ||||||||||||||||||||||||||||||||
Reported (GAAP) | CTI restructuring initiatives | Venezuelan special items | Liz Earle gain on sale | Pension settlement charge | Debt-related items | Special tax items | Adjusted (Non-GAAP) | |||||||||||||||||||||||||
Total revenue | $ | 5,284.5 | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | 5,284.5 | ||||||||||||||||
Cost of sales | 2,073.4 | — | 26.6 | — | — | — | — | 2,046.8 | ||||||||||||||||||||||||
Selling, general and administrative expenses | 3,133.9 | 44.8 | 91.7 | — | 23.8 | — | — | 2,973.6 | ||||||||||||||||||||||||
Operating profit | 77.2 | 44.8 | 118.3 | — | 23.8 | — | — | 264.1 | ||||||||||||||||||||||||
(Loss) income before taxes | (11.7 | ) | 44.8 | 114.1 | (44.9 | ) | 23.8 | 8.0 | — | 134.1 | ||||||||||||||||||||||
Income taxes | (802.0 | ) | (3.8 | ) | 0.8 | (6.7 | ) | — | — | 693.0 | (118.7 | ) | ||||||||||||||||||||
Net (loss) income | $ | (813.7 | ) | $ | 41.0 | $ | 114.9 | $ | (51.6 | ) | $ | 23.8 | $ | 8.0 | $ | 693.0 | $ | 15.3 | ||||||||||||||
Diluted EPS | $ | (1.84 | ) | $ | 0.10 | $ | 0.26 | $ | (0.11 | ) | $ | 0.06 | $ | 0.02 | $ | 1.57 | $ | 0.03 | ||||||||||||||
Gross margin | 60.8 | % | — | 0.5 | — | — | — | — | 61.3 | % | ||||||||||||||||||||||
SG&A as a % of revenues | 59.3 | % | (0.8 | ) | (1.7 | ) | — | (0.5 | ) | — | — | 56.3 | % | |||||||||||||||||||
Operating margin | 1.5 | % | 0.8 | 2.2 | — | 0.5 | — | — | 5.0 | % | ||||||||||||||||||||||
Effective tax rate | * | * | ||||||||||||||||||||||||||||||
SEGMENT OPERATING PROFIT (LOSS) | ||||||||||||||||||||||||||||||||
Latin America | $ | 55.6 | $ | 2.0 | $ | 118.3 | $ | — | $ | — | $ | — | $ | — | $ | 175.9 | ||||||||||||||||
Europe, Middle East & Africa | 139.6 | 4.2 | — | — | — | — | — | 143.8 | ||||||||||||||||||||||||
North America | (46.9 | ) | 17.0 | — | — | 17.6 | — | — | (12.3 | ) | ||||||||||||||||||||||
Asia Pacific | 26.8 | 10.2 | — | — | — | — | — | 37.0 | ||||||||||||||||||||||||
Global and other | (97.9 | ) | 11.4 | — | — | 6.2 | — | — | (80.3 | ) | ||||||||||||||||||||||
Total | $ | 77.2 | $ | 44.8 | $ | 118.3 | $ | — | $ | 23.8 | $ | — | $ | — | $ | 264.1 | ||||||||||||||||
SEGMENT OPERATING MARGIN | ||||||||||||||||||||||||||||||||
Latin America | 2.2 | % | 0.1 | 4.8 | — | — | — | — | 7.1 | % | ||||||||||||||||||||||
Europe, Middle East & Africa | 8.7 | % | 0.3 | — | — | — | — | — | 9.0 | % | ||||||||||||||||||||||
North America | (6.4 | )% | 2.3 | — | — | 2.4 | — | — | (1.7 | )% | ||||||||||||||||||||||
Asia Pacific | 5.7 | % | 2.2 | — | — | — | — | — | 7.9 | % | ||||||||||||||||||||||
Global and other | — | % | — | — | — | — | — | — | — | % | ||||||||||||||||||||||
Total | 1.5 | % | 0.8 | 2.2 | — | 0.5 | — | — | 5.0 | % |
THREE MONTHS ENDED SEPTEMBER 30, 2014 | ||||||||||||||||||||
Reported (GAAP) | CTI restructuring initiatives | Venezuelan special items | Pension Settlement charge | Adjusted (Non-GAAP) | ||||||||||||||||
Total revenue | $ | 2,138.2 | $ | — | $ | — | $ | — | $ | 2,138.2 | ||||||||||
Cost of sales | 813.9 | — | 2.0 | — | 811.9 | |||||||||||||||
Selling, general and administrative expenses | 1,136.4 | 2.5 | — | 5.4 | 1,128.5 | |||||||||||||||
Operating profit | 187.9 | 2.5 | 2.0 | 5.4 | 197.8 | |||||||||||||||
Income before taxes | 144.4 | 2.5 | 2.0 | 5.4 | 154.3 | |||||||||||||||
Income taxes | (52.4 | ) | (0.5 | ) | — | (2.0 | ) | (54.9 | ) | |||||||||||
Net income | $ | 92.0 | $ | 2.0 | $ | 2.0 | $ | 3.4 | $ | 99.4 | ||||||||||
Diluted EPS | $ | 0.21 | $ | 0.01 | $ | 0.01 | $ | 0.01 | $ | 0.23 | ||||||||||
Gross margin | 61.9 | % | — | 0.1 | — | 62.0 | % | |||||||||||||
SG&A as a % of revenues | 53.1 | % | (0.1 | ) | — | (0.3 | ) | 52.8 | % | |||||||||||
Operating margin | 8.8 | % | 0.1 | 0.1 | 0.3 | 9.3 | % | |||||||||||||
Effective tax rate | 36.3 | % | 35.6 | % | ||||||||||||||||
SEGMENT OPERATING PROFIT (LOSS) | ||||||||||||||||||||
Latin America | $ | 142.3 | $ | 0.2 | $ | 2.0 | $ | — | $ | 144.5 | ||||||||||
Europe, Middle East & Africa | 55.5 | (0.4 | ) | — | — | 55.1 | ||||||||||||||
North America | (18.3 | ) | 1.8 | — | 4.0 | (12.5 | ) | |||||||||||||
Asia Pacific | 9.0 | — | — | — | 9.0 | |||||||||||||||
Global and other | (0.6 | ) | 0.9 | — | 1.4 | 1.7 | ||||||||||||||
Total | $ | 187.9 | $ | 2.5 | $ | 2.0 | $ | 5.4 | $ | 197.8 | ||||||||||
SEGMENT OPERATING MARGIN | ||||||||||||||||||||
Latin America | 13.3 | % | — | 0.2 | — | 13.5 | % | |||||||||||||
Europe, Middle East & Africa | 9.0 | % | (0.1 | ) | — | — | 8.9 | % | ||||||||||||
North America | (6.6 | )% | 0.7 | — | 1.4 | (4.5 | )% | |||||||||||||
Asia Pacific | 5.2 | % | — | — | — | 5.2 | % | |||||||||||||
Global and other | — | % | — | — | — | — | % | |||||||||||||
Total | 8.8 | % | 0.1 | 0.1 | 0.3 | 9.3 | % |
NINE MONTHS ENDED SEPTEMBER 30, 2014 | ||||||||||||||||||||||||
Reported (GAAP) | CTI restructuring initiatives | Venezuelan special items | FCPA accrual | Pension settlement charge | Adjusted (Non-GAAP) | |||||||||||||||||||
Total revenue | $ | 6,510.4 | $ | — | $ | — | $ | — | $ | — | $ | 6,510.4 | ||||||||||||
Cost of sales | 2,580.0 | — | 119.7 | — | — | 2,460.3 | ||||||||||||||||||
Selling, general and administrative expenses | 3,700.2 | 76.4 | 16.0 | 46.0 | 28.9 | 3,532.9 | ||||||||||||||||||
Operating profit | 230.2 | 76.4 | 135.7 | 46.0 | 28.9 | 517.2 | ||||||||||||||||||
Income before taxes | 69.1 | 76.4 | 189.4 | 46.0 | 28.9 | 409.8 | ||||||||||||||||||
Income taxes | (124.4 | ) | (20.8 | ) | (11.9 | ) | — | (10.4 | ) | (167.5 | ) | |||||||||||||
Net (loss) income | $ | (55.3 | ) | $ | 55.6 | $ | 177.5 | $ | 46.0 | $ | 18.5 | $ | 242.3 | |||||||||||
Diluted EPS | $ | (0.13 | ) | $ | 0.13 | $ | 0.41 | $ | 0.11 | $ | 0.04 | $ | 0.55 | |||||||||||
Gross margin | 60.4 | % | — | 1.8 | — | — | 62.2 | % | ||||||||||||||||
SG&A as a % of revenues | 56.8 | % | (1.2 | ) | (0.2 | ) | (0.7 | ) | (0.4 | ) | 54.3 | % | ||||||||||||
Operating margin | 3.5 | % | 1.2 | 2.1 | 0.7 | 0.4 | 7.9 | % | ||||||||||||||||
Effective tax rate | 180.0 | % | 40.9 | % | ||||||||||||||||||||
SEGMENT OPERATING PROFIT (LOSS) | ||||||||||||||||||||||||
Latin America | $ | 196.9 | $ | 18.0 | $ | 135.7 | $ | — | $ | — | $ | 350.6 | ||||||||||||
Europe, Middle East & Africa | 199.7 | 17.2 | — | — | — | 216.9 | ||||||||||||||||||
North America | (54.1 | ) | 17.4 | — | — | 21.4 | (15.3 | ) | ||||||||||||||||
Asia Pacific | 15.6 | 2.9 | — | — | — | 18.5 | ||||||||||||||||||
Global and other | (127.9 | ) | 20.9 | — | 46.0 | 7.5 | (53.5 | ) | ||||||||||||||||
Total | $ | 230.2 | $ | 76.4 | $ | 135.7 | $ | 46.0 | $ | 28.9 | $ | 517.2 | ||||||||||||
SEGMENT OPERATING MARGIN | ||||||||||||||||||||||||
Latin America | 6.2 | % | 0.6 | 4.3 | — | — | 11.0 | % | ||||||||||||||||
Europe, Middle East & Africa | 10.3 | % | 0.9 | — | — | — | 11.2 | % | ||||||||||||||||
North America | (6.2 | )% | 2.0 | — | — | 2.4 | (1.7 | )% | ||||||||||||||||
Asia Pacific | 3.0 | % | 0.6 | — | — | — | 3.6 | % | ||||||||||||||||
Global and other | — | % | — | — | — | — | — | % | ||||||||||||||||
Total | 3.5 | % | 1.2 | 2.1 | 0.7 | 0.4 | 7.9 | % |
THREE MONTHS ENDED SEPTEMBER 30, 2015 | ||||||||||||||||||
Constant $ revenue | ||||||||||||||||||
Year-over-Year Impacts of: | ||||||||||||||||||
Revenue % change | C$ revenue % change | 2014 Brazil VAT credits | 2015 Brazil IPI tax | Liz Earle divestiture | C$ revenue % change, excluding special revenue items | |||||||||||||
Total Avon | (22 | )% | (2 | )% | 2 pts | 2 pts | 1 pt | 3 | % | |||||||||
Latin America | (26 | )% | 1 | % | 4 pts | 4 pts | — | 9 | % | |||||||||
Brazil | (42 | )% | (10 | )% | 8 pts | 8 pts | — | 6 | % | |||||||||
Europe, Middle East & Africa | (19 | )% | 3 | % | — | — | 3 pts | 6 | % | |||||||||
Gross Margin | Operating Margin | |||||||||||||||||
Total Avon | 2015 | 2014 | Change | 2015 | 2014 | Change | ||||||||||||
Reported (GAAP) | 60.8 | % | 61.9 | % | (110) bps | 1.4 | % | 8.8 | % | (740) bps | ||||||||
Adjusted (Non-GAAP) | 61.2 | % | 62.0 | % | (80) bps | 3.2 | % | 9.3 | % | (610) bps | ||||||||
Impacts of: | ||||||||||||||||||
2015 Brazil IPI tax | 30 bps | — | 120 bps | — | ||||||||||||||
2014 Brazil VAT credits | — | (70) bps | — | (180) bps | ||||||||||||||
Adjusted, excluding special revenue items | 61.5 | % | 61.3 | % | 20 bps | 4.4 | % | 7.5 | % | (310) bps | ||||||||
Operating Margin | ||||||||||||||||||
Latin America | 2015 | 2014 | Change | |||||||||||||||
Reported (GAAP) | 4.4 | % | 13.3 | % | (890) bps | |||||||||||||
Adjusted (Non-GAAP) | 5.0 | % | 13.5 | % | (850) bps | |||||||||||||
Impacts of: | ||||||||||||||||||
2015 Brazil IPI tax | 220 bps | — | ||||||||||||||||
2014 Brazil VAT credits | — | (350) bps | ||||||||||||||||
Adjusted, excluding special revenue items | 7.2 | % | 10.0 | % | (280) bps | |||||||||||||
1 Year Avon Products Chart |
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