Avon Soars After Discussing Overseas Growth, Vowing to Cut Costsby and
Avon Products Inc. jumped as much as 15 percent after saying that overseas sales were up in 2015, excluding currency effects, and vowing to cut costs by $350 million over the next three years.
Excluding North America, revenue was about $6 billion last year, the New York-based cosmetics giant said on Thursday at its investor day. Holding currency constant, that represents 2 percent growth. Otherwise, the sales were down 19 percent, a reflection of the toll that the strong dollar has taken on offshore revenue.
The remarks sparked optimism that the company can stage a comeback after a controversial deal to divide up its operations. In a $605 million transaction announced last month, Avon is selling a majority stake in its North American division to private equity firm Cerberus Capital Management. Though the North American unit had struggled in recent years, some investors have complained that the company is unloading the business for a “fire sale” price.
The shares climbed as high as $2.79 following Thursday’s comments, marking the biggest intraday gain since the Cerberus deal was announced on Dec. 17. Before the rally, the stock had lost 40 percent of its value in 2016.
Avon plans to give its final quarterly results on Feb. 11.