By Ted Nuyten
Avon Products, Inc. (NYSE:AVP), a globally recognized leader in direct selling of beauty and related products, announced its results for the fourth quarter and fiscal year ended December 31, 2016.
“We made good progress in the first year of our Transformation Plan, exceeding our cost savings targets, improving our profit margin, and significantly strengthening our balance sheet.
However, the financial results for the fourth quarter were disappointing, largely due to the decline in Active Representatives and an unexpected increase in bad debt expense,” said Sheri McCoy, Chief Executive Officer, Avon Products Inc.
“As we move into 2017, we are taking actions to deliver more consistent performance across our markets, with Representative engagement remaining a key priority in our growth plan, while navigating continued challenging global economic and political headwinds.”
Highlights for Fiscal 2016:
- Revenue declined 7% to $5.7 Billion; Increased 2% in constant dollars
- Active Representatives and Ending Representatives, both from Reportable Segments, declined 1% and were relatively unchanged, respectively
- Operating Margin increased 290 bps to 5.6%; Adjusted1 Operating Margin increased 80 bps to 6.5%
- Diluted Loss Per Share From Continuing Operations of $0.25; Adjusted Diluted Earnings Per Share From Continuing Operations of $0.04
- Foreign currency negatively impacted Diluted Earnings Per Share by an estimated $0.27 per share and Adjusted Diluted Earnings Per Share by an estimated $0.28 per share, driven in each case by the strength of the U.S. dollar against the currencies of the countries in which the Company operates
- The Company realized an estimated $120 Million of cost savings in year one of the Transformation Plan
- Debt was reduced by approximately $260 Million and the maturity profile was extended
Highlights for Fourth Quarter of 2016:
- Revenue declined 2% to $1.6 Billion; Relatively unchanged in constant dollars
- Active Representatives from Reportable Segments declined 2%
- Bad Debt Expense increased 210 bps, primarily in Brazil
- Operating Margin increased 290 bps to 6.8%; Adjusted Operating Margin increased 130 bps to 7.3%
- Diluted Loss Per Share From Continuing Operations of $0.03; Adjusted Diluted Earnings Per Share From Continuing Operations of $0.01
Full-Year 2016 Income Statement Highlights (compared with full-year 2015)
- Total revenue for Avon Products, Inc. declined 7% to $5.7 billion, but increased 2% in constant dollars.
- Total revenue from reportable segments declined 7% to $5.7 billion, but increased 3% in constant dollars.
- Active Representatives declined 1%, primarily due to a decline in Asia Pacific that was partially offset by an increase in Europe, Middle East & Africa.
- Average order increased 4% due to growth in all reportable segments as the Company benefited from pricing actions.
- Ending Representatives were relatively unchanged as growth in Europe, Middle East & Africa and South Latin America was offset by a decline in Asia Pacific.