* Shares fall nearly 22 percent
(Recasts with outlook, background, other details)
By Aarthi Sivaraman
NEW YORK, Oct 30 (Reuters) - Avon Products Inc, the world's
largest direct seller of cosmetics, posted a quarterly profit
that missed Wall Street expectations due to a drop in North
American sales, sending shares down nearly 22 percent.
The company also warned on Thursday that trends in North
America could deteriorate further as consumers spend less in a
weak economy.
Companies like Avon and rivals Estee Lauder and Elizabeth
Arden are generally seen as less susceptible to economic woes,
since consumers are likely to cut back on items like clothing
or jewelry before they sacrifice their personal care or makeup
brands.
Estee dented that notion earlier this week when it cut its
full-year outlook, as shoppers facing higher prices, job
losses, and a housing slump have clamped down on spending.
Avon echoed those woes on Thursday, saying tight consumer
spending in North America weighed on its results, and that it
expects that trend to worsen in the fourth quarter. The company
lowered its full-year operating margin growth view to 13
percent from a previous level of 14 percent.
The company's net profit rose to $222.6 million, or 52
cents a share in the third quarter ended Sept. 30, from $139.1
million, or 32 cents a share, a year earlier.
Excluding a restructuring charge and a one-time tax
benefit, Avon earned 45 cents a share, missing analysts'
average expectation for a profit of 52 cents a share, according
to Reuters Estimates.
OVERSEAS SALES SURGE
Total quarterly sales rose 13 percent to $2.6 billion.
Sales in North America fell 3 percent. Sales were up 25 percent
in its Latin America market and 25 percent in China.
Avon noted that it has not seen any measurable impact of
the economic and financial crisis outside North America, but
was keeping a close eye on those markets.
Avon also expects the recent strength in the U.S. dollar to
hurt fourth-quarter and full-year growth rates and operating
margins.
The company said it continues to expect revenue to grow at
an average mid-single-digit rate over the long term.
Avon's shares were down $5.82 at $20.85.
(Reporting by Aarthi Sivaraman, editing by Maureen Bavdek)
Content Provided by
Reuters Reuters is the largest international news agency -- providing professionals around the world with stories that move the markets.
- 
- 
- 
Welcome,
Guest!
News
