Avon Q4 hit by falling beauty sales and currency exchange

Sales for the quarter were up by 1.3 percent to $1.3bn – a result that included a 5 percent impact from negative currency translations, but was equally helped by higher retail prices worldwide, together with a strong performance from the China market.

But despite the modest sales gain, net earnings fell by 15 percent to $229.5m, hit by the effects of currency translations as well as increasing commodity prices.

During an investors conference call CEO Andrea Jung also pointed to the fact that the company had been hit by slower sales in the Russian market, together with disruptions to distribution in the Brazil market.

However, despite the difficulties experienced during the quarter, Jung also stated that the company was sticking by its pledge to deliver mid-single digit local currency sales growth during 2011

“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,” said Jung.

“Looking ahead, we are aggressively addressing execution challenges which dampened our second-half 2010 performance.”

During the fourth quarter the company reported that beauty sales declined 1 percent, a figure that was affected by a 2 percent dip in sales for color cosmetics and a 12 percent drop in sales for the skin care category.

On a regional basis Latin America sales were up 5 percent, North America sales up 1 percent, Central and Eastern European sales were down 6 percent, Western Europe, Middle East and Africa sales were up 9 percent and Asia Pacific increased by 8 percent.

For the full year sales were up 6 percent to $10.9bn, a figure that was also up 6 percent in constant dollar rates. Beauty sales were also up by 6 percent at both reported and constant dollar rates.