Avon Shares Tumble After Unexpected Third-Quarter Lossby
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.