Stronger dollar weighs on Avon Products in 3Q

NEW YORK (AP) - Avon Products Inc. said Thursday having 10 percent more people selling its products during the third quarter helped sales, but the stronger dollar hurt its revenue from some markets, and its profit fell 30 percent.

The cosmetics, gift and home products company earned $156.2 million, or 36 cents per share, for the period ended Sept. 30. That's down from $222.6 million, or 52 cents per share, a year earlier.

Avon said in July that its cost-cutting would include 1,200 jobs, or 2.8 percent of its staff worldwide, by 2013. But it has added thousands more sales people in the U.S. and abroad, who are not employees, as workers everywhere seek new sources of income during the recession.

Price increases across all categories helped Avon offset weak sales of beauty products and other negatives.

The cost of Avon's restructuring, including cutting jobs and reducing overhead, rose to $34 million, or 6 cents per share, from $14 million, or 2 cents per share, a year earlier. Excluding those costs, Avon's net income totaled 42 cents per share, more than the 40 cents per share analysts polled by Thomson Reuters predicted. Analysts typically exclude one-time items like restructuring expenses.

Avon cut its advertising spending 21 percent to $84 million but said it was advertising the same amount as a year earlier because media prices have fallen.

Revenue rose in Latin America and Asia-Pacific, but fell in North America, Central & Eastern Europe, Western Europe, Middle East and Africa as well as China. The net effect was a 4 percent drop in revenue, from $2.64 billion in the same quarter a year earlier to $2.55 billion this quarter.

The stronger dollar pulled down revenue 11 percentage points because overseas sales convert back to fewer U.S. dollars. That impact could lessen because the dollar has been weakening in the fourth quarter.

During an investor meeting, CFO Charles Cramb predicted the weaker dollar would help fourth-quarter sales in the mid-single-digit percentage range.

Analysts expected sales of $2.57 billion.

Avon said sales of beauty products climbed 8 percent on a local currency basis, with growth in sales of fragrance, color cosmetics, skin care and personal care units.

The company said it continues to expect mid-single-digit revenue growth, minus the effect of the stronger dollar in the long term.