Source: Company reports/Coresight Research

4Q17 Results

Avon Products reported 4Q17 revenues of $1.57 billion, below the consensus estimate of $1.60 billion and flat year over year. The company’s operating margin increased by 150 basis points, to 8.3%, and its adjusted operating margin increased by 251 basis points, to 9.8%. Adjusted EPS was $0.12, beating the $0.07 consensus estimate and compared with $0.01 in the year-ago quarter. GAAP EPS was $0.17, compared with $(0.04) in the year-ago quarter.

Results by Geography

• Revenue for the Europe, Middle East & Africa region was up 3%, but down 2% in constant dollars, driven by lower average order size, which was partially offset by an increase in the number of Active Representatives. The constant-dollar revenue decline was primarily driven by Russia and the UK, with declines in those countries partially offset by growth in Turkey. Results were mixed in the remainder of the segment.
• North Latin America revenue was relatively unchanged, and was down 2% in constant dollars, driven by a decrease in Active Representatives that was due in part to the impact of the September 2017 earthquake in Mexico and was partially offset by higher average order size.
• South Latin America revenue was down 2%, and was down 1% in constant dollars, driven by a decrease in Active Representatives that was partially offset by higher average order size. Constant-dollar revenue was primarily impacted by a decline in Brazil, which was partially offset by growth in Argentina, driven by inflationary pricing.
• Revenue in the Asia-Pacific region was down 3%, and was down 2% in constant dollars, primarily due to lower average order size and a decrease in Active Representatives. Constant-dollar revenue growth in the Philippines was offset by declines in most other markets in the segment.

Results by Product Type

Beauty:

• Skincare revenues were $438.3 million in the quarter, up 2% in US dollars and down 1% in constant currency.
• Fragrance revenues were $45.7 million, up 1% in US dollars and down 1% in constant currency.
• Color revenues were $253.3 million, flat in US dollars and down 2% in constant currency.

Fashion & Home:

• Fashion (jewelry, watches, apparel, footwear, accessories and children’s) revenues were $229.4 million in the quarter, down 2% in US dollars and down 4% in constant currency.
• Home (gift and decorative products, housewares, entertainment and leisure, children’s, and nutrition) revenues were $161.6 million, down 3% in US dollars and down 4% in constant currency.

Full-Year Results

For the year, Avon Products reported revenues of $5.72 billion, flat year over year and down 2% in constant dollars. Full-year adjusted EPS was $0.06, compared with $0.04 the prior year. GAAP EPS was $0.00, compared with $(0.29) the prior year.

Outlook

The company is maintaining its long-term goals of achieving mid-single-digit constant-dollar revenue growth and a low-double-digit operating margin, which will take some time.