Avon Beauty sales declined 4 % in Q2

Avon Products reported second-quarter 2013 results. "Our second-quarter results reflect continued progress in stabilizing Avons business," said Sheri McCoy, Chief Executive Officer. "There is still significant work to be done to deliver sustainable performance in the near and longer term, but Im pleased with the progress to date. We will succeed by continuing our focus on better serving Avon Representatives, creating a compelling consumer proposition, and simplifying our business to drive both top and bottom line improvements."

Second-Quarter 2013 (compared with second-quarter 2012)

For the second quarter of 2013, total revenue of $2.5 billion decreased 2 %, but increased 2 % in constant dollars, primarily due to an increase in average order, which partially benefited from inflation in Latin America, the company stated. Active Representatives and total units were relatively unchanged and price/mix increased 2 % during the quarter. Avon Beauty sales declined 4 %, or were relatively unchanged in constant dollars. Fashion & Home sales were up 2 %, or 5 % in constant dollars.

Operating profit was $202 million and operating margin was 8.1 % in the quarter, the company reported. Operating profit included a $17 million charge associated with the highly inflationary accounting for a 32 % devaluation of Venezuelan currency, an accrual of $12 million for the offer of settlement relating to the Foreign Corrupt Practices Act ("FCPA") investigations and $8 million associated with costs to implement ("CTI") restructuring. Adjusted operating profit was $239 million and Adjusted operating margin was 9.5 %, 300 basis points higher than the second quarter of 2012. According to the company, the increase was driven by gross margin improvement and lower professional and related fees associated with the FCPA matter. Additionally, operating margin benefited from lower advertising expenses and lower net brochure costs.

As part of the companys refinancing activities, during the second-quarter of 2013, the company prepaid the $500 million principal of its 2014 Notes plus a make-whole premium. In connection with this prepayment, the company incurred a loss on extinguishment of debt of $13 million. According to the company, Avons net debt (total debt less cash) for the second quarter of 2013 was $2.0 billion, relatively unchanged from the year-end 2012 level.