Avon Products (AVP) Misses Q1 EPS by 3c; Sees FX Hit

Avon Products (NYSE: AVP) reported Q1 EPS of $0.04, $0.03 worse than the analyst estimate of $0.07. Revenue for the quarter came in at $1.8 billion versus the consensus estimate of $1.83 billion.

"Overall, the first quarter was in line with our expectations despite currency pressures that were greater than anticipated. Continuing on the momentum we saw in the second half of 2014, I'm encouraged to see improvement in our Active Representative trends and constant-dollar revenue growth in the majority of our top markets," said Sheri McCoy, Chief Executive Officer of Avon Products, Inc. "Despite continued foreign exchange pressure, I'm really impressed with how well our teams in market are managing in this volatile environment. This is a payoff for the work we've done over the past two years on strengthening our talent and improving core processes."

Full-Year 2015 Outlook

The Company continues to expect constant-dollar revenue to be up modestly in 2015 as compared with 2014. However, based on recent foreign currency rates, revenue in reported dollars is expected to be negatively impacted by foreign currency translation, which is now expected to have an approximate 17 point negative impact (compared with the previous outlook of an approximate 12 point negative impact). The Company now expects Constant-dollar Adjusted operating margin to be approximately 50 basis points lower than 2014. While the Company expects to be able to offset the additional foreign currency transaction costs, the approximate 50 basis point decline is due to the new Industrial Production Tax ("IPI") law on cosmetics in Brazil, which is effective May 1, 2015. In addition, the strengthening U.S. dollar is expected to cause a larger negative impact from foreign currency translation than originally anticipated on the Company's Adjusted operating margin in reported dollars. As a result, the Company now expects Adjusted operating margin in reported dollars to be down approximately 200 basis points as compared with 2014, due to the expected impact from foreign currency translation and IPI.*

For earnings history and earnings-related data on Avon Products (AVP) click here.

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