Avon Products, Inc. reported fourth-quarter and full-year 2014 results. For Q4 2014, total revenue of $2.3 billion decreased 12%, but increased 5% in constant dollars.
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Total units decreased 3%, and price/mix was up 8% during the quarter. Active Representatives were down 4%, while average order increased 9%.
Beauty sales declined 14%, but increased 5% in constant dollars. Fashion & Home sales declined 13%, but increased 1% in constant dollars.
Fourth-quarter 2014 gross margin was 60.7%, and Adjusted gross margin was 60.8%. Adjusted gross margin was 40 basis points lower than the prior-year quarter, primarily due to the unfavorable impact of foreign exchange driven by Europe, Middle East & Africa and Latin America, and higher supply chain costs, primarily from high-inflation countries. This was partially offset by the favorable net impact of mix and pricing, primarily due to inflationary pricing in Latin America.
Spokeswoman Lindsay Fox tells The Associated Press that the company will no longer accept orders from places including Jamaica, Haiti and the Bahamas. The spokeswoman said the company will still serve eight islands including Puerto Rico and the U.S. Virgin Islands.Avon Products Inc. says it is ceasing operations in 16 Caribbean nations.
Operating profit was $170 million, and operating margin was 7.3% in the quarter. Adjusted operating profit was $217 million, and Adjusted operating margin was 9.3%, up 110 basis points from the fourth quarter of 2013. Adjusted operating margin was favorably impacted by the benefit of Value Added Tax (VAT) credits in Brazil, as well as benefits from the Company's cost savings initiatives.
These benefits were partially offset by the negative impact of foreign currency transaction costs and translation adjustments, which reduced Adjusted operating margin by approximately 260 basis points.
Fourth-quarter 2014's effective tax rate from continuing operations was 446.6%, negatively impacted by the recognition of a non-cash income tax charge associated with the Company's deferred tax assets in the fourth quarter. The Adjusted effective tax rate was 37.2% for the fourth quarter of 2014, compared with 21.6% for the fourth quarter of 2013.
Fourth-quarter 2014's net loss from continuing operations was $330 million, or a loss of $0.75 per diluted share, compared with a net loss from continuing operations of $68 million, or a loss of $0.16 per diluted share, for the fourth quarter of 2013.
Fourth-quarter 2014's Adjusted net income from continuing operations was $89 million, or $0.20 per diluted share, compared with Adjusted net income from continuing operations of $151 million, or $0.34 per diluted share, for the fourth quarter of 2013. Foreign currency transaction costs and translation adjustments reduced fourth-quarter Adjusted earnings per diluted share by approximately $0.22. ■