Avon Products Q1 Loss Widens - Quick Facts

(RTTNews) - Avon Products Inc. (AVP) said that its first-quarter of 2014 net loss attributable to the company widened to $168.3 million from last year's $13.7 million. Loss per share winded to $0.38 from $0.03 in the year ago quarter.

Operating loss was $51 million and operating margin was (2.3)% in the quarter. Adjusted operating profit was $134 million and Adjusted operating margin was 6.1%, down 240 basis points from the first quarter of 2013. The decline in Adjusted operating margin was driven by the unfavorable impact of foreign exchange, primarily in Europe, Middle East & Africa. Adjusted operating margin was also negatively impacted by the revenue decline with respect to fixed expenses.

Net loss from continuing operations was $167 million, or a loss of $0.38 per share, compared with net loss from continuing operations of $12 million, or a loss of $0.03 per share, for the first quarter of 2013.

Adjusted net income from continuing operations was $52 million, or $0.12 per share, compared with net income from continuing operations of $113 million, or $0.26 per share, for the first quarter of 2013.

As a result of the change to the SICAD II rate, the Company recorded an after-tax loss of $42 million in the first quarter of 2014, primarily reflecting the write-down of monetary assets and liabilities. Additionally, certain non-monetary assets are carried at their U.S. historic dollar cost subsequent to the devaluation. As a result of using the U.S. historic dollar cost basis of non-monetary assets, such as inventories, these assets continue to be remeasured at the applicable rate at the time of acquisition.

As a result, the Company determined that an adjustment of $116 million to cost of sales was needed to reflect certain non-monetary assets at their net realizable value, which was recorded in the first quarter of 2014. These items had an aggregate negative impact of $0.36 per share.

For the first quarter of 2014, total revenue of $2.2 billion decreased 11%, or 3% in constant dollars. Total units decreased 6% and price/mix was up 3% during the quarter. Active Representatives were down 4%, while average order increased 1%.

Analysts polled by Thomson Reuters expected the company to report earnings of $0.21 per share and revenues of $2.20 billion for the quarter. Analysts' estimates typically exclude special items.

Beauty sales declined 12%, or 4% in constant dollars. Fashion & Home sales declined 9%, or 1% in constant dollars.

As I look at our first-quarter results, I'm not satisfied with our performance, but I'm encouraged by our progress. "We saw significant headwinds that further impacted our financial results, particularly in EMEA. However, we continue to stay the course on our plans to return Avon to sustainable, profitable growth." said Sheri McCoy, Chief Executive Officer of Avon Products.