Strong Latin American sales boost Avon 4Q results

By MAE ANDERSON

posted: 5 DAYS 18 HOURS AGO

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NEW YORK -Rapid growth in Latin America helped cosmetics maker Avon Products Inc. post a 16 percent increase in fourth-quarter profit.

However, Avon also said Thursday that it expects to post a $50 million first-quarter charge related to Venezuela's currency devaluation. It also expects the change to cost its bottom line $85 million during the year. That spooked investors, and shares fell 7.1 percent to $30.30.

Beauty sales rose 15 percent, including a 27 percent jump in color cosmetics sales. Latin America sales rose 29 percent while North America sales fell 7 percent.

The company is in the midst of a restructuring that includes cutting jobs and trimming overhead. It has focused on recruiting independent sellers, as well as broadening its assortment of less-expensive products, including products under $5, to drive sales.

Quarterly profit rose to $269.4 million, or 62 cents per share, from $232.4 million, or 54 cents per share, last year. Excluding restructuring costs, net income was 69 cents per share. Analysts polled by Thomson Reuters, on average, predicted a profit of 68 cents per share. Analyst estimates typically exclude one-time items.

Revenue rose 13 percent to $3.15 billion. Analysts expected $3.16 billion.

The ranks of Avon's salespeople grew 11 percent.

Though the impact from Venuzuela's currency devaluation may have been more than investors were bargaining for, Jeffries & Co analyst Douglas M. Lane noted that Avon has managed through inflationary economies before and come out ahead. Such inflation is expected in Venezuela following the currency devaluation.

Avon sells brands including Skin-So-Soft and Mark along with its namesake cosmetics.

For the year, profit fell 29 percent to $625.8 million, or $1.45 per share, from $875.3 million, or $2.03 per share.

Revenue fell 3 percent to $10.28 billion, from $10.59 billion last year.

2010-02-04 16:43:48