Avon Products Inc. Earnings: Margins Shrink as Costs Rise, Profit Falls

S&P 500 (NYSE:SPY) component Avon Products Inc. (NYSE:AVP) posted lower net income in the first quarter compared with a year-earlier period. Avon Products is a global manufacturer and marketer of beauty, fashion, and home products.

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Avon Products Earnings Cheat Sheet for the First Quarter

Results: Net income for Avon Products Inc. fell to $26.5 million (60 cents per share) vs. $143.6 million (33 cents per share) a year earlier. This is a decline of 81.5% from the year-earlier quarter.

Revenue: Fell 2% to $2.58 billion from the year-earlier quarter.

Actual vs. Wall St. Expectations: Avon Products Inc. beat the mean analyst estimate of 28 cents per share. It beat the average revenue estimate of $2.52 billion.

Quoting Management: Kimberly Ross, Avon’s Executive Vice President and Chief Financial Officer said: “While our first-quarter operating performance remained challenged, we are making progress toward addressing some of our operational and cost-cutting opportunities. With Sheri McCoy now on board, we are confident that her broad leadership experience and skills in managing large, complex, global organizations will help drive Avon’s future success. We look forward to communicating further with investors about our future growth strategy at the appropriate time.”

Key Stats:

A year-over-year revenue decrease last quarter breaks a four-quarter streak of revenue increases. The best quarter in that span was the second quarter of the last fiscal year, which saw revenue rise 6.6%.

Gross margin went down 3.1 percentage points to 60.8%. The change appeared to be caused by costs, which went up 6.3% from the year-earlier quarter, while revenue fell 2%.

The company trumped estimates last quarter after falling shy in the two quarters prior. In the fourth quarter of the last fiscal year, it missed the mark by 13 cents, and in the third quarter of the last fiscal year, it came in under estimates by 8 cents.

The company reported a profit last quarter after being in the red the prior quarter. In the third quarter of the last fiscal year, the company booked a net loss of $164.2 million, or a loss of 38 cents per share.

Looking Forward: The outlook for the company’s results in the upcoming quarter is unfavorable. The average estimate for the second quarter is 38 cents per share, down from 44 cents ninety days ago. For the fiscal year, the average estimate has moved down from $1.69 a share to $1.50 over the last ninety days.

(Company fundamentals provided by Xignite Financials. Earnings estimates provided by Zacks)

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