Avon profit drops 67%
Avon , the world's largest direct seller of skincare, cosmetics and accessories, said this "transition year" was moving faster than expected and that it would step up advertising spending worldwide and get back to business in China.
Though analysts remained skeptical, investors liked the news, sending shares higher by 6% to an intraday high of $33.13. Shares closed Friday at $32.61.
Only four days after the Manhattan-based company said it was cutting another 1,300 jobs, Avon turned in earnings of $56.2 million, or 12 cents a share, compared with last year's profit of $172 million, or 36 cents a share. The results included a hefty pre-tax charge of $120 million, or 19 cents a share, linked to the restructuring and substantially more than analysts were anticipating.
The quarter also included $12 million in stock-option costs. Operating margins sunk to 4.3% of sales compared with 13.9% a year ago. Without those, the company said it would have earned 31 cents a share in the latest quarter.Total revenue for the three months ended March 31 rose 6% to $2 billion from $1.88 billion.
Analysts polled by Thomson First Call had expected Avon to post earnings, on average, of 27 cents a share on revenue of $1.89 billion.