- Cosmetics maker is hurt by currency, production tax in Brazil
- Sees positive cash flow this year, though less than forecast
Avon Products Inc. fell the most in more than two years after posting an unexpected third-quarter loss, hurt by the strong dollar and a new tax in Brazil.
The loss was 11 cents a share, excluding some items, the New York-based company said Wednesday in a statement. Analysts had estimated Avon would report a profit of 7 cents a share.
Chief Executive Officer Sheri McCoy is trying to snap a string of three years of losses as Avon struggles with changing tastes among younger cosmetics buyers and the waning effectiveness of its door-to-door sales model in its home market. The company faced the added pressure of foreign-currency effects and a new industrial production tax in Brazil in the quarter. Avon on Wednesday maintained a forecast that free cash flow this year will be positive, but said the figure will be less than its previous forecast of $100 million.
The results were “worse than already-low expectations," Mark Astrachan, an analyst at Stifel Financial Corp., said in a note. The company “continues to lose share and consumer relevance in a number of key markets."
The shares fell 20 percent to $3.45 at the close in New York, the biggest one-day drop since October 2013. Avon has now slid 63 percent this year.