Avon reports 12 percent fall in quarterly sales

Cosmetics maker Avon Products Inc reported a lower-than-expected adjusted profit as surging inflation in Brazil, its biggest market, squeezed margins and a stronger dollar ate into overseas revenue.

Avon shares fell 6.5 percent in premarket trading.

The company has been struggling to boost sales in Brazil, where household spending, which boomed during most of the past decade, has stagnated over the past year as the economy ground to a halt.

The company divided its Latin American operations between two executives last November. But analysts have said the move has not improved sales from the region, which accounts for about half of the company's total revenue.

A stronger dollar also hurt fourth-quarter sales at the direct seller, whose business model involves representatives, called "Avon Ladies", selling the company's beauty products directly to shoppers.

Net loss attributable to Avon widened to $330.7 million, or 75 cents per share, in the quarter ended Dec. 31 from $69.1 million, or 16 cents per share, a year earlier.

Total revenue fell 12.2 percent to $2.34 billion, mainly due to a 7 percent decline in revenue in Brazil.

Avon said it recorded a non-cash charge of about $405 million, or 92 cents per diluted share, in the fourth quarter, related to a stronger dollar.

The dollar rose nearly 13 percent in 2014, its biggest yearly gain since 1997, when measured against a basket of major currencies.

Excluding items, the company earned 20 cents per share.

Analysts on average had expected the company to earn 25 cents per share on revenue of $2.35 billion, according to Thomson Reuters I/B/E/S.

Up to Wednesday's close of $8.58, Avon's shares had fallen about 37 percent in six months.

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