| Avon 3Q profit declines 30%, hurt by foreign exchange impacts |
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29/10/2009 18:06 (22 Day 15:46 minutes ago) | |||||
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The FINANCIAL -- Avon Products Inc., the world’s largest door-to-door cosmetics seller, reported a 30% decline in third-quarter profit, hurt by foreign exchange impacts.
Net income fell to $156.2 million, or 36 cents a share, from $222.6 million, or 52 cents, a year earlier, the New York- based company said on October 29 in a PR Newswire statement, according to Bloomberg. Revenue declined 3.5 percent to $2.55 billion.
Avon makes more than 75 percent of its revenue outside North America. Foreign-exchange translations hurt revenue growth in the quarter by about 11 percentage points, according to the statement, the same source reported. “The company has indeed suffered disproportionately from currency effects,” Ali Dibadj, an analyst at Sanford C. Bernstein & Co. in New York, said in an Oct. 15 note to investors. “Given the U.S. dollar’s recent weakening, Avon is positioned to benefit significantly from currency over the next twelve months.”
Third-quarter 2009 results included costs associated with the company's 2005 and 2009 restructuring programs, totaling $34 million pretax, or $0.06 per share after tax, while last year results included costs of $14 million, or $0.02 per share, related to the company's 2005 restructuring program, RTT News informs. On average, 12 analysts polled by Thomson Reuters expected the company to report $0.40 per share for the quarter. Analysts' estimates typically exclude special items.
On a category basis, Avon's Beauty sales, comprising cosmetics/ fragrances/skin care/ toiletries, decreased 3% year-over-year to $1.84 billion, but grew 8% in local currency, the same source reported. Beauty units increased 6%, and units overall rose 5% from the prior-year quarter. Active Representatives grew 10% in the quarter.
According to AP, the company, which has been trying to cut costs, may have to redouble its efforts, as its total debt rose by $272 million to $2.8 billion at quarter's end.
Bloomberg reported that Avon fell $1.05, or 3.1 percent, to $33 yesterday in New York Stock Exchange composite trading. The shares gained 37 percent this year before today.
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