NEW YORK Avon (AVP) reported a loss for its third quarter, reflecting lower sales in North America and the Asia Pacific region and China-related charges.
Its results missed analysts' expectations. The stock fell in premarket trading on Thursday.
The beauty products company has been struggling at home and abroad as weak sales have hurt its profitability. CEO Sheri McCoy is leading the company in a turnaround plan to cut costs, leave unprofitable markets and streamlining its operations.
For the three months ended Sept. 30, Avon lost $5.5 million, or 1 cent per share. That compares with net income of $31.6 million, or 7 cents per share, a year earlier.
The current quarter included a China-related impairment charge and a valuation allowance for deferred tax assets tied to China that totaled 12 cents per share. The results were also hurt by 3 cents per share for the devaluation of Venezuelan currency.
Removing these items, adjusted earnings from continuing operations were 14 cents per share.
Analysts, on average, expected earnings of 19 cents per share, according to a FactSet poll.
Revenue dropped 8 percent to $2.32 billion from $2.51 billion. Wall Street was looking for $2.43 billion in revenue.
North American sales declined 19 percent, or 18 percent on a constant dollar basis. Avon said that the drop was mostly because of fewer active representatives. North American beauty sales fell 20 percent, while fashion and home sales for the region dropped 16 percent.
In the Asia Pacific region, sales fell 22 percent -- or 19 percent on a constant dollar basis. Avon said this was due to fewer active representatives in some markets and unfavorable China results. It was also hurt by its decision to leave the South Korea and Vietnam markets.
The New York company's tax rate jumped to 120.1 percent from 56 percent in the prior-year period due the China-related impairment charge, Venezuelan currency devaluation and a valuation allowance for deferred tax assets related to China. Stripping out these items, the tax rate was 32.5 percent. This compared with an adjusted tax rate of 36.6 percent for the year-ago period.
Shares of Avon Products Inc. declined $2.40, or 10.7 percent, to $20 in premarket trading about 90 minutes before the market opening.