Avon Products (NYSE:AVP) on Tuesday disclosed a deeper-than-expected 15% decline in fourth-quarter profits amid service disruptions and weak sales, sparking a 3% slide in the beauty products maker’s stock.
The New York-based manufacturer and marketer of cosmetics, fragrances and jewelry said it earned $229.5 million, or 53 cents a share, last quarter, compared with a profit of $269.4 million, or 62 cents a share, a year earlier. Excluding one-time items, it earned 59 cents a share, widely missing the Street’s view of 67 cents a share.
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Avon, which is the largest direct seller of cosmetics in the world, said its revenue rose just 1.3% to $3.18 billion. Analysts had been calling for sales of $3.28 billion. North American revenue inched up 1%, while Latin American sales climbed 5%.
“As we closed out the year, we continued to experience disappointing sales results which were negatively impacted by service disruptions in Brazil and weak performance in Russia,” CEO Andrea Jung said in a statement. “We are aggressively addressing execution challenges which dampened our second-half 2010 performance.”
Avon said its beauty sales slipped 1% last quarter, compared with a 12% dive in skin care sales and a 4% increase in fragrance sales. Personal care revenue was up 3%.
Shareholders punished Avon for the disappointing results, sending its stock down 4.4% to $28.06.