NEW YORK — Special items and challenges in Latin America dragged down Avon Products Inc.’s third-quarter profits by 21.2 percent as income from continuing operations rose in the period.
Net income fell to $90.3 million, or 38 cents per diluted share, for the quarter ended Sept. 30. This compared with year-ago profits of $114.6 million, or 48 cents.
As expected, the firm’s business transformation initiatives levied, in aggregate, an aftertax charge of $25.2 million, or 10 cents per share, on the quarter. The initiatives include a series of actions to streamline its processes and operations. No more charges from the plan are expected.
Exclusive of this charge, as well as special items in the year-ago quarter, income from continuing operations rose 10.1 percent to $115.5 million, or 48 cents per diluted share. With some help from higher-than-expected currency hedging gains, results crossed the finish line a penny ahead of Wall Street’s expectations for earnings per share of 47 cents.
Revenues rose 3 percent for the period to $1.46 billion from $1.42 billion. Without foreign currency translation, sales rose 11 percent, driven by 13 percent unit growth and a 10 percent increase in active representatives.
Quarterly sales in the U.S. rose 6 percent, with a 9 percent uptick in units. Active representatives increased by 2 percent. Operating profits climbed 17 percent.
European sales jumped 28 percent, or 23 percent in local currencies, while units grew by 32 percent. The region’s operating income increased 21 percent, or 18 percent in local currencies.
Latin American sales dropped 14 percent, but expanded 13 percent in local currencies. Operating profits slid 9 percent, but picked up 14 percent, excluding fluctuations in exchange. Avon noted its business in Argentina remains profitable, despite the country’s economic challenges, including a major currency devaluation this year.
In Asia, sales improved 9 percent, or 7 percent in local currencies. Operating profits were up 26 percent, or 23 percent excluding currency fluctuation.
Jim Gingrich, an analyst with Bernstein, noted: "When you step back and look at it, it was a pretty solid quarter in a tough environment, given how much of their business is in Latin America. Certainly, they’re doing a heck of a job in Latin America, given the circumstances."For the nine months, net income inched up 2.2 percent to $341.6 million, or $1.42 per diluted share, from $334.2 million, or $1.39, a year ago. Before unusual items, net income grew 12.9 percent to $366.8 million, or $1.52 cents per share. Revenues for the year-to-date were up 3 percent to $4.37 billion from $4.25 billion a year ago.
For the year, Avon continues to expect earnings of $2.30 per share, excluding unusual items.
“Azzedine has been one of the biggest influences in my life. He has always been such a strong, loving, fatherly figure to me. I call him Papa. His designs are indescribably unique, they are pieces of art. He knew how to make the female form look its loveliest. I have so many memories of him; my favorite might be during my first show with him in Paris. He liked me and he wanted to help me get more work. He called all his friends at Kenzo and Comme des Garcons, and asked them to book me. They said, ‘But she can’t walk!’ And he said, ‘but she has such a great ass!' His friendship and support has been the great privilege of my career. I can't imagine life without him. Repose en paix mon Papa.” - @stephanieseymour tells @wwd. #wwdfashion (📷: @steveeichner) #alaia #azzedinealaia
Azzedine Alaïa, flanked by two of his closest friends, models Stephanie Seymour and Naomi Campbell.
He designed Seymour’s dress for her 1995 wedding to Peter Brant, and treated Campbell (who famously called him Papa), like a daughter. For more on the legendary designer, tap the link in bio. #wwdfashion #alaia #azzedinealaia
Azzedine Alaïa's “I-did-it-my-way” ethos stood out starkly at a time when brands are experimenting with consumer-facing fashion shows, coed formats and trans-seasonal collections – anything to perk up lackluster sales of ready-to-wear in an age of Insta-everything. “It’s not creation anymore. This becomes a purely industrial approach,” the late designer told WWD in an interview last year. “But anyway, the rhythm of collections is so stupid. It’s unsustainable. There are too many collections.” Read more about the iconic designer’s life and work on wwd.com, link in bio. #wwdfashion #azzedinealaia (📷: @WWD Archive, 1986) #alaia
Sneaker reselling app @goat’s latest exhibit, "The Greatest: New York," tells the story of New York's sneaker culture. To celebrate the exhibit, an intimate crowd gathered on Thursday night at the pop-up gallery space, located at Platform in Culver City, to hear guest speaker and illustrator @esymai talk about her own rise in streetwear and women in the business. "For me I'm just someone who is creative. I like to create things," said Chang. #wwdfashion
Azzedine Alaïa, one of the most iconic couturiers of the modern era whose body-con designs defined Eighties fashion, has died in Paris. The diminutive Tunisian-born designer, known for his structured knitted dresses with fitted waists and impeccably cut, figure-hugging second skin silhouettes was deeply admired by his peers, and counted supermodel Naomi Campbell - his adoptive daughter - among his inner circle, one of a gang of glamazons including Farida Khelfa, Carla Bruni and Stephanie Seymour who became ambassadors of his style. (📷: Alexandre Guirkinger) #wwdblast