Avon Products Q3 Profit Down - Update

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(RTTNews) - Beauty company Avon Products Inc. (AVP | Quote | Chart | News | PowerRating) reported a 30% decline in third-quarter profit, hurt by restructuring expenses and foreign exchange impacts.

The New York-based company's net income attributable to the Avon was $156.2 million or $0.36 per share, compared to $222.6 million or $0.52 per share in the year-ago quarter. Net income declined to $157.6 million from $224.7 million a year ago.

Third-quarter 2009 results included costs associated with the company's 2005 and 2009 restructuring programs, totaling $34 million pretax, or $0.06 per share after tax, while last year results included costs of $14 million, or $0.02 per share, related to the company's 2005 restructuring program.

On average, 12 analysts polled by Thomson Reuters expected the company to report $0.40 per share for the quarter. Analysts' estimates typically exclude special items.

Total revenue edged down 4% to $2.55 billion from $2.64 billion last year, but rose 7% on a local-currency basis, as foreign exchange pressured growth by 11 percentage points. Ten analysts had consensus revenue estimate of $2.57 billion for the quarter.

On a category basis, Avon's Beauty sales, comprising cosmetics/ fragrances/skin care/ toiletries, decreased 3% year-over-year to $1.84 billion, but grew 8% in local currency. Beauty units increased 6%, and units overall rose 5% from the prior-year quarter. Active Representatives grew 10% in the quarter.

Sales from Fashion category, comprising fashion jewelry/watches/apparel/ footwear/accessories was down 3% to $425.2 million. Home sales, including sales from gift & decorative products/ housewares/ entertainment & leisure/kids/nutrition, declined 5% year-over-year to $260 million.

Geographically, Latin America's third-quarter 2009 revenue increased 5% to $1.11 billion, and rose 18% on a local-currency basis.

In North America, revenue declined 8% to $535.2 million, on both reported and local currency basis, with 5% drop in units sold. The company noted that the region's revenue continued to be pressured by lower consumer spending and a continued double-digit decline in non-Beauty.

In Central & Eastern Europe, quarterly revenue fell 18% year-over-year to $314.1 million, but grew 7% on a local-currency basis.

Western Europe, Middle East & Africa recorded revenues of $298.2 million in the recent quarter, down 6% on a reported basis, but increased 7% on a local-currency basis.

Asia-Pacific's revenue was $222.6 million, up 1% on a reported basis and 2% on a local-currency basis. In China, third-quarter revenue declined 11% to $67.3 million, with no impact from foreign exchange.

Avon Products' third-quarter 2009 operating profit was $259 million, compared with $297 million in the prior-year quarter.

For the nine-month period, the company posted net income attributable to the Avon of $356.4 million or $0.83 per share versus $642.9 million or $1.49 per share last year. Total revenue was $7.2 billion, down 9% from $7.88 billion in the comparable period.

Among others in the industry, Estee Lauder Companies Inc. (EL | Quote | Chart | News | PowerRating) is slated to report its first-quarter results before the market opens on October 30. Analysts expect the company to report earnings of $0.34 per share on revenues of $1.82 billion.

AVP closed the Wednesday's regular trading session at $33.00. In the past 52-week period, the stock has traded in the range of $14.40 - $35.82.

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