Avon expects profit from North America in 2015
By Devika Krishna Kumar
(Reuters) - Avon Products Inc AVP.N, a direct seller of cosmetics, said it expects its North American business to turn profitable in 2015 as it cuts costs and introduces more incentives for its sales representatives.
The company's shares rose as much as 8 percent in early trading on Thursday, making the stock one of the top percentage gainers on the S&P 500 index.
Avon, which reported its seventh straight quarter of operating loss in North America, said it hired a "chief representative officer" for the region and would upgrade its website in September in a bid to retain its representatives.
The new website will allow representatives, called "Avon Ladies", to reach more shoppers by increasing their online presence.
The company has had troubles bringing in new representatives and holding on to its existing ones in North America, which contributes about 14 percent to its total revenue.
The cosmetics maker said in June it would cut about 600 jobs, largely in its North America unit, and said it expected restructuring efforts to save about $50-$55 million a year. Avon has been trying to stem a decline in sales and profit since Chief Executive Sheri McCoy took control in 2012. The company said it expects to report better results in the second half of 2014 as it manages its representatives better and introduces market-specific products in Russia and Mexico. "With less negative FX impact anticipated in 2H14 we continue to anticipate modest year-over-year margin expansion resulting from announced cost savings and improved top-line results," Stifel Nicolaus analysts said.
SECOND-QUARTER MISS Continuación...