Avon
This article was originally published in The Rose Sheet
Executive Summary
Beauty sales are expected to fall by mid- to high-single digits in the third quarter, attributed to tough comparisons versus the prior-year period, the company told securities analysts the week of Sept. 6. Cosmetics sales are expected to increase, while Avon's personal care business are forecast to be flat - strong hair care sales will be offset by weak Skin-So-Soft sales. Fragrance sales will decline by double digits, due in part to the underperformance of Forever Amber, analysts say. Skin care sales also are expected to be down by double digits, partly because this year's Skintrition launch did not rival the performance of the Anew retinol hand cream in 1998. Avon told the investment community it hopes to recover some of the losses in the fourth quarter following the upcoming launch of Perceive fragrance for women and Luminosity skin cream. Overall sales for the company are expected to be up 2%, less than analyst projections of 3% to 4%. Avon stock fell 10% to 41-3/16 on Sept. 7
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Avon estimates
Third quarter earnings are expected to be up 13%, in line with analyst predictions, while income in the fourth quarter will fall below estimates, the company announced Sept. 29. Avon is expected to rebound for the year, with earnings up double-digits, representing "very solid growth" over the company's 17% income increase in 1998, the company said. In the U.S., "trends in beauty sales in the fourth quarter are expected to improve significantly over third quarter" in light of "weakness in early sales of holiday gifts." The stock tumbled 38.3% to 25-13/16 on Sept. 29 on the news. The direct seller had earlier told analysts that fourth quarter sales will be up about 2% versus Street expectations of 3% to 4% (1"The Rose Sheet" Sept. 13, In Brief). The company also expects to accelerate its share repurchase program through 2000
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