Avon Products Inc. (AVP) rose to the highest price in a year after first-quarter profit topped analysts’ estimates as Chief Executive Officer Sheri McCoy’s cost-reduction plan starts to produce results.
The door-to-door cosmetics seller’s shares advanced 4.1 percent to $23.16 at the close in New York for the highest closing price since April 2012. The shares have jumped 61 percent this year, the third-best performance in the Standard & Poor’s 500 Index.
McCoy has been cutting jobs and exiting markets including Ireland and Vietnam as part of a plan to save $400 million by 2016. Avon also is reviewing operations in smaller, underperforming markets to be restructured or closed and is evaluating alternatives for the Silpada jewelry unit.
The first-quarter net loss was $13.7 million, or 3 cents a share, compared with profit of $26.5 million, or 6 cents, a year earlier, the New York-based company said today in a statement. Profit excluding costs related to the devaluation of the Venezuelan currency and restructuring charges totaled 26 cents a share. Analysts projected 14 cents, on average.
“While considerable work remains to be done, the turnaround is on track as steps new management is taking to improve performance are working,” Mark Astrachan, an analyst at Stifel Financial Corp. in New York, wrote in a note today. He recommends buying the shares.
Adjusted gross margin, which excludes the effect of the Venezuelan devaluation, was 62.5 percent, an increase of 1.6 percent from a year earlier, helped by lower freight and material costs.
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