NEW YORK — Double-digit sales increases in each of its international markets helped Avon Products Inc. outdo even its own expectations for the first quarter.
For the three months ended March 31, the New York-based cosmetics direct seller saw earnings vault 49.7 percent to $148.1 million, or 62 cents a diluted share, outpacing both its own guidance and Wall Street’s consensus estimate of 59 cents a share. Comparatively, the company reported earnings of $98.9 million, or 42 cents a share, in the year-ago period.
Sales, fueled by a 23 percent gain in beauty products, improved 19.5 percent to $1.75 billion from $1.47 billion. Weakness of the U.S. dollar worked to the company’s benefit. Excluding positive affects of currency exchange, sales rose 14 percent.
The European and Latin American markets experienced some of the most dramatic growth. European sales rose 38 percent during the quarter. Excluding benefits from currency translation, the region reported a 24 percent gain.
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“European results continue to benefit from Russia’s stellar performance,” said Andrea Jung, chairman and chief executive, in a statement. According to the firm, Russia reported a 90 percent sales increase during the quarter, a 70 percent gain excluding benefits from currency translation.
The launch of the company’s Anew Clinical Wrinkle and Line Corrector in the U.K. spurred a 27 percent spike in sales, a 10 percent gain excluding the benefits of currency translation.
Venezuela, Brazil and Argentina were the stars of the Latin American market, where sales grew 24 percent, or 17 percent before currency benefits.
China, a country the company referred to as its “top-growth prospect,” remained the largest generator of sales gains in the Asia-Pacific market. For the Asia-Pacific region sales expanded 17 percent, and 10 percent in local currencies.
While organic growth may have been easier to come by in developing markets, the company also realized gains in its home market of the U.S. as well. Sales in the U.S., its largest market, grew 7 percent, driven by an 8 percent gain in beauty sales.
In particular, the firm said the skin care category performed well in the U.S., a sentiment expressed earlier in the week by William Lauder, chief operating officer of Estée Lauder Cos. Inc. “Looking across product categories we see skin care continuing to show strength in a number of different segments, not just the moisturizing segment,” Lauder told WWD following the announcement of the company’s third-quarter results. “There’s a general trend towards skin care products.”
Based on the strong results, Avon’s management now expects earnings per share for the year to be in the range of $3.30, a sizeable bump from previous guidance of between $3.18 and $3.20 a share.
“We are very confident that this year will reflect the true impact of Avon’s transformation taking hold,” said Jung.