Avon Products, Inc. (AVP) Up on Possible Sale of North American Operations

Shares of New York, NY, based Avon Products, Inc. (AVP) rose on Tuesday, against the backdrop of a mixed day in stocks overall. Avon's stock was up $1.14 per share, rising 14.23% to close at 9.15 on volume of 33,439,524 shares. It's been reported that the company is "exploring strategic alternatives , including the possible sale of it's North American operations.

In operation since 1886, Avon manufactures and markets cosmetics and beauty related products.
Its product categories are Beauty, Fashion and Home. The Beauty category - the business segment for which it is best known - consists of color cosmetics, fragrances, skin care and personal care. The Fashion category consists of fashion jewelry, watches, apparel, footwear, accessories and children's products. The Home category consists of gift and decorative products, housewares, entertainment and leisure products and nutritional products. The company operates in five geographical segments, including Latin America, North America, Central and Eastern Europe, Western Europe and the Middle East & Africa, and Asia Pacific.

The Wall Street Journal reported on Tuesday - based on information provided by people familiar with the company - that Avon is exploring strategic alternatives, which includes the possible sale of its struggling North American operations. "Exploring strategic alternatives is considered Wall Street-speak for a company redefining it's future direction, including reorganizing operations or selling off assets or operations.

Such action would be consistent with the company's mounting losses, and the fact that its stock has fallen by nearly half in the past year, including a decline of nearly 8% so far in 2015. The company has reported 13 consecutive quarterly declines in revenue.

The sale of North American operations isn't considered to be imminent, but the segment has posted losses for the past three years in a row. The company has been struggling to improve its operations in the US, at the same time that its dealing with soft demand in Brazil, the company's largest market.

The company announced on Monday evening that it will postpone its Analyst Day from the originally scheduled date of May 13 to the Fall of 2015. The announcement cited that Chief Financial Officer James Scully, appointed only about one month ago, will need more time to prepare for the event. But it is considerate that the strategic alternatives are the primary reason. According to the sources, the company isn't yet prepared to discuss any major moves at this time.

In February, Avon announced total revenue for the fourth quarter of 2014 of $2.3 billion, a decrease of 12% compared to the same period in 2013. Beauty sales declined 14%.

For all of 2014, Avon had total revenue of $8.6 billion, down 12% from the $9.8 billion it had for all of 2013. The company had a net loss of $-388.6 million - most of the loss attributable to the fourth quarter - or $-0.88 per share, compared to a net loss of $-56.4 million, or $-0.13 per share for 2013.

More specifically, Avon's North American operations sales were down 12% in the 4th quarter of 2014, compared to the 4th quarter of 2013. For all of 2014, North American sales were down 17% compared to 2013.

The company announced that it will provide a live web cast of its first quarter, 2015, earnings conference all on Thursday, April 30 at 9:00 a.m. EDT.

Other News on AVP

Avon Products Faces Challenges But Shows Promise; Stock Earns Neutral Thesis
There are areas of promise, including growing healthcare concerns that have accelerated the demand for safe and natural beauty care products.

Avon May Stop Calling...For Good
Due to rising competition, times have been anything but good for American icon Avon Products.

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Published on Apr 15, 2015
By Kevin Mercadante

Copyrighted 2020. Content published with author's permission.

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