Avon Products Inc. experienced a strong first-quarter performance in Latin America, which offset a sales decline in North America — and propelled double-digit gains in overall sales and profits, the direct selling giant reported Tuesday.
Profits were up 23.1 percent during the quarter ended March 31 to $184.7 million, from $150 million in the year-ago period, on total revenues that rose 14.2 percent to $2.5 billion from $2.19 billion a year ago.
Earnings per diluted share were 43 cents, up 26 percent, from 34 cents a share a year ago, just short of Wall Street analysts' expectations of 44 cents for the current quarter.
Sales in Latin America, the firm's biggest global market, jumped 32 percent to $864.3 million. In North America, however, sales were down by 6 percent to $593.6 million. In China — a smaller market overall for Avon — there was also considerable growth of 29 percent in the quarter, to $87.8 million.
"We're off to a good start to the year," Andrea Jung, chairman and chief executive officer of Avon, told analysts during a conference call Tuesday morning. "Beauty growth is on track."
Sales of beauty products, including cosmetics, fragrances, skin care items and toiletries, were up by 17 percent to $1.78 billion. Individually, fragrance sales were up 20 percent, thanks to celebrity and designer lines, according to Jung. And color cosmetics were up by 15 percent — as was personal care — while skin care sales increased by 13 percent.
The firm's Beauty Plus and Beyond Beauty businesses, which include jewelry, watches, apparel, accessories, home products and gift and decorative items, generated some $698.1 million in quarterly revenues.
Jung said she believes Avon is well balanced geographically and is confident that the firm's multiyear restructuring strategy can yield margins of about 14 percent, a level last seen in 2005.
Avon expects annualized savings of about $430 million once its restructuring strategy, a plan started in 2005 and expected to run through 2011 or 2012, is fully implemented — and savings are projected to reach $270 million this year, on $469 million in plan costs recorded through the first quarter.
First-quarter operating profit came in at $296 million, a 24.4 percent rise from $238 million in the prior year. Operating margin was 11.8 percent compared with 10.9 percent in the prior-year quarter. First-quarter operating profits included costs associated with the company's restructuring program of $26 million, the firm noted.
Issa Rae stopped by WWD's NYC headquarters to talk about season two of "Insecure," which premieres this Sunday on HBO. Click link in bio for all the details. #wwdeye (📷: @jgreenery; Styled by @mayteallende)
A Stella McCartney sketch of a custom dress made from protein-based silk in partnership with biotech lab Bolt Threads. The dress will be displayed at The Museum of Modern Art's upcoming design exhibition, "Items: Is Fashion Modern?"