“The entire organization is working with a sense of urgency,” the firm’s chief executive officer Sheri McCoy told analysts during the company’s first-quarter earnings call on Tuesday. She later added, “We’re seeing some progress with pockets of the business showing early signs of stabilization. While we anticipate that there will be some bumps along the way, we’re confident that the company is on the right track.”
The firm is beginning to deliver early signs of progress, reporting a first-quarter net loss attributable to Avon of $13.7 million, or 3 cents a diluted share, compared with net income of $26.5 million, or 6 cents a share for the year ago period. Excluding certain items — including a charge related to the devaluation in Venezuelan currency — adjusted net income was $112 million, or 26 cents a share. These figures beat Wall Street analysts’ consensus estimate of 14 cents a share. The news sent Avon shares to a 52-week high of $24.30 on Tuesday morning. Shares closed at $23.17, up 4.18 percent, on Tuesday.
McCoy, who took the helm at Avon one year ago, said the company’s focus is on stabilizing its four regions, particularly North America and Asia-Pacific, where revenues have declined in the quarter. Revenue in North America slid 15 percent to $406.2 million, as the number of active representatives in the region declined by double digits. “Today, frankly, the U.S. is a drain on the overall business,” said McCoy. “What success looks like for us is to stem the decline and really get it to a position where we’re strengthening the profitability.”
Revenue in Asia-Pacific declined 10 percent to $200 million, driven in part by a 31 percent drop in revenue in constant dollars in China where Avon is transitioning from direct selling to a retail model. In Latin America, revenue was flat at $1.14 billion, with Brazil up 11 percent in constant currency, and in Europe, Middle East and Africa revenue ticked up 1 percent to $733.1 million. McCoy noted that markets such as Poland and Russia have fully transitioned to an online ordering model over the last 18 months. She added that while Avon is encouraged by these changes, they are more difficult to implement in the U.S., due to an older IT infrastructure.
Avon’s net revenue in the quarter declined 3.9 percent to $2.48 billion, compared with $2.58 billion in the year-ago quarter, but was flat in constant dollars. Total units declined 3 percent. The number of active representatives gained 1 percent.
Total beauty sales declined 5 percent, or 1 percent in constant dollars. By category, in constant dollars, fragrance gained 6 percent, while personal care was flat, and color and skin care were down 2 percent and 9 percent, respectively. McCoy said she was most disappointed by the slide in Avon’s skin-care business. She called out the launch of Anew Clinical Pro Line Corrector Treatment with A-F33 in the U.K. as a bright spot, but said the company needs to better define the positioning of its midtier skin-care range.
When asked by one analyst if a direct-selling company like Avon needs to advertise given it has legions of representatives toting product brochures, McCoy said, “It depends on what market we’re in and where we land with the household penetration. If we have heavy household penetration in some markets, what we see is that advertising does, in fact, help grow our brand.” She pointed out that Avon spent less on advertising in the quarter than it did in the year-ago period. “In some areas where we’ve walked away from advertising we’ve seen a negative impact on our brand..…We also have to get smart about how we use media. Digital advertising, for example, is much less expensive than TV. So we’ll continue to look at the right media mix.”
In his new book “Hollywood Royale,” Andy Warhol’s Protégé Matthew Rolston celebrates the Eighties revival of Hollywood glamour. Featuring more than 100 portraits taken by Rolston from 1977 to 1993, the book contains photos of icons like Michael Jackson, Cyndi Lauper, and @drewbarrymore, pictured here in 1991. “Hollywood Royale,” out today, will be accompanied by an exhibition opening at Los Angeles’ Fahey/Klein Gallery on March 1. #wwdeye
"Nowadays when life is not so happy with everything going on in the world, I think people come to me for a little bit of whimsy and color and fun." - Designer Rebecca De Ravenel on her cult-favorite jewelry line. (📸 : @vsteves) #wwd40
“Everyone is talking about how the retail industry is struggling, but I think it’s an incredible time because brands who are doing something different and innovative are setting themselves up for the future,” said @adamgoldston, who founded the luxury athletic brand @apl with his brother @ryangoldsten. The Goldston’s are part of WWD’s 40 under 40: a group of industry notables. See the rest of the list on WWD.com. (📷: @vsteves) #wwd40
@eyeswoon blogger Athena Calderone debuted her first-ever cookbook, “Cook Beautiful,” which is heavily centered on the presentation and visual expression of food. Pictured here are her miso glazed carrots from the book. Get the recipe on WWD.com. (📷: @johnny_miller_) #wwdeye
“It’s passion that helps get anybody to a certain point and it’s what’s propelled me,” said Kith founder @ronniefieg, one of WWD’s 40 under 40: a group of industry notables who are changing the face of retail, fashion and beauty. Fieg, who opened a Manhattan flagship on October 7, began his career at age 13 as a stock boy and salesman for footwear chain David Z. “I think staying true to [my] beliefs, hard work and passion have gotten me to where [Kith] is today.” See the rest of the 40 at WWD.com. (📷: @vsteves) #wwd40
25-year-old @samweaving is about to break out this fall, starring in Netflix’s horror film “The Babysitter,” fittingly out today on Friday the 13th. That’s not the only place you’ll be seeing her, though — Weaving’s got a role Showtime’s “SMILF” and another alongside Frances McDormand and Woody Harrelson in “Three Billboards Outside Ebbing, Missouri.” Though she’s got a full plate at the moment, there’s one role she’s got her eye on: Marilyn Monroe. “I’m a little too young at the moment, but it’s on my bucket list,” the actress told WWD (📷: @dandoperalski) #wwdeye
BFF's Poppy Jamie and Suki Waterhouse celebrated the launch of their bag line Pop x Suki at Nordstrom last night. "The line is really about our friendship, and how we are so different but complement each other," said Waterhouse. 👯 (📷: Katie Jones) #wwdeye
After designing the new @louisvuitton and @bulgariofficial flagships and a @chanelofficial boutique opening in Japan, @petermarinoarchitect has another project on his plate: The Lobster Club. Located in the Seagram Building, it’s the famed architect’s first restaurant project in New York, serving up modern Japanese brasserie-style cuisine. Bronze hues, bespoke material detailing, blush and chartreuse tones and a heavy emphasis on Picasso can be seen throughout. Mark your calendars for Nov. 1 for the much-anticipated opening. (📷: @clint_spaulding) #wwdeye
Did you know: @carlychaikin of "Mr. Robot" has been painting for about a decade? The actress, who plays Darlene on the show, is a self-taught artist who lists Salvador Dalí and Chuck Close as some of her idols. Chaikin told WWD that painting is a form of meditation for her — A much-needed one given the intensity of "Mr. Robot." See a piece Chaikin is working on at WWD.com (📷: @jilliansollazzo) #wwdeye