Avon Q2 Revenue Down 12% To $1,170 Billion
Avon Products, Inc. (NYSE:AVP) today announced its results for the quarter ended June 30, 2019.
Jan Zijderveld, Avon CEO, said,
“In the second quarter, we continued to execute our Open Up strategy, with pricing and productivity gains which drove adjusted operating margin expansion and improved free cash flow1.”
Mr. Zijderveld continued, “Our focus on productivity in the second quarter, including less discounting, more effective incentives, optimizing promotions and more favorable mix, led to a 5% improvement in Average Representative Sales with price/mix up 9%.
We have continued to improve mix and tiering by increasing our focus on higher priced categories, like Fragrance, Skin Care, and product bundles. Faster development and launches of on trend innovation has allowed us to leverage pricing power on new items.”
Mr. Zijderveld emphasized,
“Recruiting and retention remain key areas of focus. Helping Her earn more money while we generate more profitable revenue is key to maintaining a healthier and happier Representative base and crucial to driving our future growth.”
Gustavo Arnal, Avon CFO, said, “In the second quarter, we drove positive impact on adjusted operating margin and cash flow generation given our intentional interventions to increase productivity.
A combination of pricing efforts and savings across multiple cost lines led to 190 basis points of adjusted operating margin expansion, despite unfavorable FX. We monetized non-core assets to self fund our Open Up Avon strategy. Free Cash Flow improved significantly, including working capital efficiencies.”
Highlights for Second-Quarter 2019 (compared with second-quarter 2018, unless otherwise noted):
- Total Reportable Segment Revenue decreased 12% in reported currency and 5% in constant dollars. Price/mix increased 9%.
- Average Representative Sales in constant dollars from Reportable Segments increased 5%, driven by increases in all segments.
- Active Representatives from Reportable Segments declined 10%, with decreases reported in all segments, and declined 3% compared to first-quarter 2019.
- Gross Margin of 57.7%. Adjusted Gross Margin decreased 170 basis points to 58.4%, unfavorably impacted primarily by foreign exchange.
- Operating Margin of 2.6%. Adjusted Operating Margin increased 190 basis points to 7.6%, driven by price/mix and savings across multiple cost lines.
- Diluted Loss Per Share from continuing operations of $0.03. Adjusted Diluted Earnings Per Share of $0.06, compared with Adjusted Diluted Loss Per Share of $0.03 for second-quarter 2018.
About Avon Products, Inc.
For 130 years Avon has stood for women: providing innovative, quality beauty products which are primarily sold to women, through women. Millions of independent Representatives across the world sell iconic Avon brands such as Avon Color and ANEW through their social networks, building their own beauty businesses on a full- or part-time basis.
Avon supports women’s empowerment, entrepreneurship and well-being and has donated over $1 billion to women’s causes through Avon and the Avon Foundation. Learn more about Avon and its products at www.avonworldwide.com
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