Beauty Industry

Avon Reports Second Quarter Results

The turnaround remains challenging for the company.

July 31, 2014

By: Jamie Matusow

Editor-in-Chief

Avon Products, Inc. reported second-quarter 2014 results.

Sheri McCoy, CEO, commented:

“As anticipated, our second-quarter results were tough. While Avon’s turnaround remains challenging, we are putting the people and processes in place to lay the foundation for returning Avon to sustainable, profitable growth. As we move to the second half of the year, we continue to expect improved performance.”

For the second quarter of 2014, total revenue of $2.2 billion decreased 13%, or 3% in constant dollars. Total units decreased 6% and price/mix was up 3% during the quarter. Active Representatives² were down 6%, while average order² increased 3%.
Beauty sales declined 13%, or 3% in constant dollars. Fashion & Home sales declined 15%, or 5% in constant dollars.

A few more highlights from the report:

Second-quarter 2014 gross margin and Adjusted gross margin were 63.0%.

Operating profit was $93 million and operating margin was 4.3% in the quarter.

Second-quarter 2014’s effective tax rate from continuing operations was 69.7%, compared with 41.8% in the second quarter of 2013.

Second-quarter 2014’s net income from continuing operations was $20 million, or $0.04 per diluted share, compared with net income from continuing operations of $85 million, or $0.19 per diluted share, for the second quarter of 2013.

Net cash used by operating activities was $7 million for the six months ended June 30, 2014, compared with net cash provided of $70 million for the same period in 2013, unfavorably impacted primarily by lower earnings. The overall net cash used during the six months ended June 30, 2014 was $330 million, which was comparable with the same period in 2013.

Avon’s net debt (total debt less cash) at June 30, 2014 was $1.9 billion, up $240 million from the year-end 2013 level, and $170 million lower than at June 30, 2013.