NEW YORK (AP) — Avon Products Inc.'s first-quarter profit dropped 82 percent, hurt by a bigger restructuring charge, commodity costs and higher labor costs as the company fends off makeup company Coty's takeover overture and adjusts to its new CEO.
The beauty company's adjusted earnings were short of Wall Street estimates, and its shares fell more than 2 percent in premarket trading on Tuesday.
Founded in 1886, Avon became a fixture in households across the country as its legions of "Avon ladies" went door to door selling makeup to family, friends and acquaintances.
The company, whose brands include Skin-So-Soft, Anew and mark, reported net income of $26.5 million, or 6 cents per share, for the period ended March 31, down from $143.6 million, or 33 cents per share, a year earlier.
Excluding one-time items, earnings were 10 cents per share.
But analysts surveyed by FactSet, who typically exclude one-time items from their estimates, expected earnings of 28 cents per share.
Restructuring charges totaled $27 million, or 4 cents per share, compared with $15 million, or 2 cents per share, in the prior-year period.
Avon shares fell 60 cents, or 2.8 percent, to $21 per share in premarket trading. The stock closed at $21.60 per share on Monday, less than half of its all-time high of $46.11 in 2004.
Revenue slipped 2 percent to $2.58 billion from $143.6 million a year ago. Still, it was enough to beat Wall Street's estimate of $2.52 billion.
Fragrance and skincare sales dipped 1 percent, while sales of personal care products fell 2 percent on a reported basis.
Avon continued to experience weakness in North America, with revenue down 4 percent to $490.3 million. The company has struggled with a sales dropoff in the region over the years, and about 80 percent of its more than $11 billion in annual revenue now comes from overseas.
Revenue fell 4 percent to $394.6 million in Central and Eastern Europe and slid 5 percent to $330 million for Western Europe, the Middle East and Africa. Revenue for the Asia Pacific region dropped 2 percent to $221.7 million, while Latin America revenue edged up 1 percent to $1.14 billion.
Total units dropped 1 percent in the quarter, while the number of direct sellers declined 2 percent.
Avon rejected a $10 billion takeover overture from beauty products maker Coty Inc. last month, but Coty said it still wants to meet with Avon. Coty has said it wants to look at Avon's books before making a formal offer. Avon has so far declined, saying that its board continues to believe that the offer does not reflect the value of the New York company.
Avon is in a transition phase. New CEO Sherilyn S. McCoy, a long-time Johnson & Johnson executive, has been in place for less than a month. McCoy replaced embattled CEO Andrea Jung, who had come under fire for failing to stem the company's declines and wrap up a bribery investigation.
Jung — the first female CEO of the 126-year-old company — remains as Avon's executive chairman.
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