Avon Sees Higher Profit in Second Quarter

After spinning off its North America business in March, Avon Products Inc. (AVP—NYSE) began to improve its bottom line in the most recent quarter.

The beauty company is implementing a cost-cutting plan introduced in January that will include trimming its staff and supply chain and moving its headquarters to the United Kingdom. After three years, the plan is expected to save Avon $350 million a year before taxes.

In the quarter ended June 30, the company cleared a profit of $33 million, up from $28.8 million a year earlier. Per-share earnings slipped to 6 cents from 7 cents a year ago. On an adjusted basis, earnings were down from 9 cents a share to 7 cents a share. Analysts polled by Thomson Reuters had expected earnings of 2 cents a share.

Revenue fell 8 percent to $1.43 billion, beating the $1.41 billion predicted by analysts.

Earlier this year, the beauty company inked a deal with Cerberus Capital Management LP for majority ownership of Avon’s domestic operations. Cerberus agreed to inject $435 million into the business, which it then took private as New Avon LLC, along with another $170 million investment in Avon Products.

Revenue was down across the company’s remaining segments, hurt by foreign exchange rates. Constant-dollar revenue was up in all segments except Asia Pacific, where the company logged a 5 percent decline.

“Our performance improvements were broad-base with nine of our top 10 markets growing in local currency,” said Sheri McCoy, CEO of Avon Products. “We continue to make steady progress on a number of fronts: improving pricing discipline; driving additional cost out of the business; and continuing to build our brand and enhance the Representative experience,” said Sheri McCoy, CEO of Avon Products.

Following Tuesday’s release, shares in Avon climbed as much as 21 percent to $5.04—the stock’s biggest intraday jump since Feb. 12. Ahead of the report, the shares were up 2.7 percent this year.

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Herbalife Misses Sales Expectations, Raises Outlook

Herbalife Ltd. yielded a profit of $93.6 million in the third quarter, the nutrition company said Tuesday.

The shake and supplement seller reported net income of $1.09 per share, compared to 13 cents per share a year ago. Excluding one-time costs, earnings were $1.28 per share, exceeding management’s guidance of $1.00 to $1.10 and the Zacks Concensus Estimate of $1.07.

Expenses incurred in the quarter included $4.7 million related to regulatory inquiries and $2.8 million spent responding to attacks on the company’s business model.

Third-quarter revenue was $1.1 billion, down 12 percent on a reported basis and up 5 percent in constant currency. Analysts had expected revenue of $1.15 billion. The most significant revenue growth came from China, where constant currency sales spiked 27 percent. The company’s weakest performance came from the Asia Pacific region outside China, which reported a 16 percent revenue decline.

The company provided fourth-quarter earnings guidance of 85 cents to 95 cents per share on an adjusted basis, reflecting an unfavorable currency impact of about 27 cents per share. Excluding currency impact, adjusted earnings are expected to fall within the range of $1.12 to $1.22 per share.

For the full year, the company now expects earnings in the range of $4.65 to $4.75, up from its previous guidance of $4.50 to $4.70.

Shares in Herbalife, up 53 percent this year, fell 2.7 percent in after-market trading on Tuesday.

Herbalife Appoints Former FTC Commissioner to Head Compliance Efforts

Herbalife is bolstering its compliance team with the addition of a Senior Vice President of Global Member Compliance and Privacy. The nutrition company has appointed former FTC commissioner Pamela Jones Harbour to the new position, reporting to Executive Vice President and General Counsel Mark Friedman.

Harbour served as FTC Commissioner from 2003 to 2010 and also spent 12 years as a prosecutor for the New York State Attorney General’s office. At Herbalife, she will oversee the development and monitoring of the company’s training and mentoring programs. Harbour—who earned the Electronic Privacy Information Center’s (EPIC) “Champion of Freedom Award” for her FTC work defending consumer privacy—will also direct the company’s global privacy and cyber security efforts.

Herbalife also … Click here to read the full story.

 

 

USANA Reports Second Quarter, Growth in Associate Numbers

USANA Health Sciences Inc. (USNA—NYSE) reported financial results for its fiscal second quarter 2014 after the markets closed on Tuesday. While missing earnings estimates by 14 cents at $1.36 per share (according to Briefing.com the Capital IQ Consensus Estimate was $1.50), the company reaffirmed net sales and earnings guidance for 2014.

For the second quarter ended June 28, 2014, net sales decreased to $188.3 million, down 0.4 percent compared with $189.1 million in the prior-year period. Net sales, on a comparative basis, were negatively impacted by: $7.0 million of incremental sales in the second quarter of 2013 that occurred ahead of policy changes, which included restricting Associate purchases to their country of residence; $3.3 million from unfavorable changes in currency exchange rates; and price discounts that the company implemented in 2013. The number of active Associates for the second quarter increased 11.4 percent year-over-year, and 6.8 percent sequentially, largely as a result of the initiatives implemented by the company in 2013.

Net earnings for the second quarter were $19.3 million, compared with $24.2 million during the prior-year period. Earnings per share for the quarter were $1.36, compared with $1.72 in the second quarter of the prior year. Weighted average diluted shares outstanding were 14.2 million in the second quarter of 2014, compared with 14.1 million in the prior-year period.

During the quarter, the company accelerated its share repurchase activity by repurchasing approximately 682,000 shares under its authorized repurchase program for a total investment of $49.1 million. Additionally, as of July 25, 2014, the company has spent $21.4 million during the month of July to repurchase approximately 285,000 shares.

“USANA generated solid results during the second quarter, notwithstanding several factors that created a challenging year-over-year comparable,” said Dave Wentz, USANA’s CEO. “As we execute our 2014 strategies, we are confident that our performance will continue to accelerate during the second half of the year and we will deliver another year of record results in 2014.”

The company reaffirmed guidance for fiscal year 2014 with earnings per share between $5.50 and $5.65 (versus $5.66 Capital IQ Consensus Estimate) and consolidated net sales between $770 million and $790 million (versus $784.99 Capital IQ Consensus Estimate).

Read the full results here.

Oriflame Takes a Hit amid Ukraine Crisis

Rising tensions amid Ukraine’s political unrest have triggered a currency decline that is taking a toll on businesses across the region. With a weakening Ukrainian hryvnia and Russian ruble, Swedish cosmetics company Oriflame has seen stock fall 24 percent in 2014.

On Sunday, Crimea’s Russian-backed government held a referendum on seceding from Ukraine and unifying with Russia. The U.S. and EU have announced they will not recognize the results and have issued sanctions against top officials in Russia, calling for an end to its military activities in the region. Russian forces have occupied the former Soviet republic since late February.

During intraday trading on Friday, shares in Oriflame dropped to 145.3 kronor in Stockholm trading, their lowest price since April 2005. The company, which generates half its business in the Baltics and the states constituting the Russian Commonwealth, is no stranger to political unrest.

“It’s of course worrisome when two of our biggest markets are in conflict with each other, but we continue as usual with our business,” Johanna Palm, head of investor relations at Oriflame, told Bloomberg.

U.S.-based direct sellers with a stake in the region include Amway, Avon, Herbalife, Mary Kay, Morinda and Nu Skin.

Read more on Oriflame’s business in Ukraine.

Nu Skin Stock Jumps to Record High

Nu Skin


Shares in Nu Skin rose 19.2 percent yesterday, posting the largest percentage increase of the day at the close of the New York Stock Exchange. The stock started the day up 79 percent since the start of 2013, and its $79.36 closing price marked an all-time high for the company’s shares.

Earlier this week, we reported on the momentum Nu Skin’s business is experiencing in Asia. The Utah-based personal-care company has also announced improved quarterly and full-year outlooks. Wednesday’s stock gain reflects Nu Skin’s strong performance as well as investors’ confidence in the industry as a whole.

On Tuesday, Nu Skin raised its outlook for the quarter all the way from $0.91-$0.95 a share to $1.20, saying it now expects revenue of about $680 million—$100 million more than its previous projection. Earnings (EPS) projections for the full year are now $4.85-$5.00, up from $4.18-$4.30. Nu Skin will report second-quarter earnings on Aug. 1.

Oriflame Commencing Share Buyback

Oriflame

In a very positive move for the company and shareholders of one of the world’s largest direct sellers, Oriflame announced this week that it will repurchase up to 5.7 million of the company’s shares.

In a press release, the company reported that the share repurchases will commence immediately and go through April 23, 2013. According to the company, the purpose of the share buybacks is to optimize the capital structure, and the acquired SDRs shall be converted to shares and be cancelled. The Board of Directors will propose the next Annual General Meeting to cancel the shares so acquired.

The entire release can be found on the company’s website here.