NEW YORK (AP) — Avon Products Inc. posted a fourth-quarter net loss as sales slumped, costs rose and the beauty products company marked down the value of a silver jewelry company it acquired in 2010.
Shares slumped 4.5 percent in premarket trading Tuesday.
Avon, which is searching for a new CEO, has struggled to improve its operations in Brazil and been hurt by the weak economy. The New York company said Tuesday that it doesn't expect its margins — how much it keeps of revenue after costs — to improve this year.
Avon posted a loss of $400,000, break-even on a per share basis, for the three months ended Dec. 31. It earned $229.5 million, or 53 cents per share, in the prior-year period.
Avon took a $263 million charge on its Silpada Designs Inc. unit, acquired in 2010, because the rising price of silver since then has hurt Silpada's margins and revenue, Avon said. Excluding that and restructuring charges, Avon said it earned 39 cents per share.
Analysts polled by FactSet expected earnings of 51 cents per share.
Avon's stock declined 78 cents to $16.75 before the market opened.
Revenue fell 4 percent to $3.04 billion from $3.18 billion as units sold dropped 2 percent and the company's head count of direct sellers shrank 3 percent. The results narrowly missing analysts' forecast of $3.1 billion.
Avon said its U.S. business, excluding Silpada, had a 5 percent drop in revenue, while revenue for North America fell 7 percent.
The company's revenue dropped in all of its geographic regions except for Latin America, where revenue rose 2 percent despite ongoing problems in Brazil.
Avon said higher commodity costs also weighed on its business.
The company, which is known in the U.S. for "Avon ladies" who go door-to-door selling its cosmetics, announced in October that the Securities and Exchange Commission is investigating its contact with financial analysts in 2010 and 2011.
For the year, Avon's earnings declined 15 percent to $513.6 million, or $1.18 per share, from $606.3 million, or $1.39 per share.
Full-year revenue rose 4 percent to $11.29 billion from $10.86 billion.
Chairman and CEO Andrea Jung said in a statement that for 2012, Avon is going to focus on improving sales and managing costs.
Avon announced in December that it was looking for a new CEO to help put it back on a growth track. Jung, who has served as Avon's CEO since 1999, will continue to serve in both roles until a successor is found and then work solely as chairman.
The company expects to maintain its annual dividend of 92 cents per share this year.
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