Avon (AVP) revealed a large drop in first-quarter earnings on Tuesday as beauty sales stalled and overhaul costs mounted, but managed to top Wall Street expectations when excluding one-time expenses.
The New York-based retailer, which relies on active reps to directly sell its beauty products, swung to a loss of $13.7 million, or 3 cents a share, down 152% from a year-earlier profit of $26.5 million, or 6 cents.
The decline was related to high restructuring and other costs, as Avon prepaid the $535 million of outstanding private notes during the quarter and repaid $380 million of the outstanding term loan principal related to refinancing activities.
It also recorded a special charge of $34 million related to the 32% devaluation of the Venezuelan currency, which pushed revenue in the country down 15% -- or up 3% in constant dollars.
Excluding the one-time expenses, though, Avon said adjusted profit was $172 million, or 26 cents a share, topping average analyst estimates of 14 cents in a Thomson Reuters poll.
Revenue for the three-month period ended March 31 slumped 4% to $2.5 billion on a 3% decline in total units. The results, which were partially offset by a slight improvement in active representative and a 3% increase in price/mix, nearly matched Wall Street expectations.
Sales were down 2% in its high-growth Brazilian market, though climbed 11% in constant dollars as Avon closed lesser performing regions and honed its focus on Brazil, leading to a bump in active reps.
Avon earlier this month said it would axe another 400 jobs as part of its previously-announced multi-million dollar turnaround. The jobs were reduced in smaller, less profitable markets like Ireland, as well as others in the Middle East and Africa. The company called regions like Brazil that have been performing above expectations in recent quarters "high priority."
Shares of Avon gained 1.5% in early Tuesday trade.