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Avon reports that 1Q profit nearly triples amid turnaround efforts

Avon reports that 1Q profit nearly triples amid turnaround efforts

Avon Products Inc.'s first-quarter profit nearly tripled, as the direct seller of beauty products shows results from its turnaround efforts. Its shares rose 3 percent in premarket trading.
Avon said Tuesday that it earned $150 million (euro110.25 million), or 34 cents per share, in the three months ended March 31, up from $56.2 million, or 12 cents per share, in the year-ago period.
Revenue rose 9 percent to $2.19 billion (euro1.61 billion) from $2.0 billion in the year-ago period. Analysts surveyed by Thomson Financial expected revenue of $2.13 billion (euro1.57 billion).
"We are pleased with the strength and geographic balance of our first-quarter performance," Andrea Jung, chairman and CEO, said in a statement. "While still in the midst of our multi-year turnaround, we are making good progress against all points of our plan."
Jung announced in November 2005 a multiyear restructuring plan after the company's global sales sagged. The plan involved steep job cuts, the elimination of management layers to better react to market trends, and the realignment of manufacturing centers and outsourcing work to countries where labor costs are cheaper.
In the first quarter, the number of active representatives rose 4 percent, and the number of products sold increased 4 percent compared with the year-ago quarter.
Sales of beauty products recorded a third-consecutive quarter of double-digit growth, increasing 10 percent led by personal care, which was up 17 percent.
Avon said it increased advertising by 80 percent to $71 million (euro52.19 million) in the quarter to fund the launch of "Hello Tomorrow," its first global brand campaign, as well as new product introductions such as Anew Alternative Intensive Eye Cream and Avon Color Ultra Color Rich Lipstick.
"We continue to significantly elevate our investment levels against both our brand and our channel," said Jung in a statement, "and we are seeing strong paybacks as a result. Fueling these investments are savings from the many restructuring initiatives that we have undertaken and that continue to be an ongoing part of our turnaround program."
In the North America region, first-quarter revenue rose 3 percent from the prior-year period, with growth in all markets. In Latin America, first-quarter revenue grew 7 percent. Western Europe, the Middle East and Africa again had solid revenue growth, which was up 17 percent, due to continued strength in Turkey, where revenue increased more than 30 percent, and the U.K., where revenue increased in the high teens.
In Central and Eastern Europe, revenue rose 17 percent, helped by continued strong growth in fragrances and color cosmetics, and by Russia, where revenue expanded over 30 percent.
Asia-Pacific revenue increased 5 percent led by high-teens revenue growth in the Philippines. Revenue in Japan was approximately unchanged from the prior year.
Meanwhile, revenue in China grew 44 percent, reflecting further expansion of the company's direct-selling business, which contributed over one half of the region's revenues in the quarter.


Updated : 2021-05-15 02:19 GMT+08:00