NEW YORK—Avon Products Inc., a direct-seller of beauty products, reports earnings for the first quarter on Tuesday. The following is a summary of key developments and analyst opinion related to the period.
OVERVIEW: Avon Products is in the midst of a turnaround plan begun in 2005 including job cuts, eliminating management layers, realigning manufacturing centers and outsourcing work to countries with cheaper labor costs. The company expects to achieve annualized savings of about $430 million once all initiatives are fully implemented by 2011 to 2012, with these savings projected to reach $300 million in 2009.
The company is bolstering its fragrance offerings. In March it said will create two fragrances with fashion label Emanuel Ungaro Maison, available globally in August.
In April Avon, which is based in New York, said it will partner with actor Patrick Dempsey to make a men's fragrance.
The fragrance will debut in November 2008 in the U.S., with a global launch in 2009.
BY THE NUMBERS: Analysts polled by Thomson Financial expect a profit of 44 cents per share on revenue of $2.43 billion.
ANALYST TAKE: Citi Investment Research analyst Wendy Nicholson wrote in a note on Monday she expects about 10 percent sales growth, a deceleration from previous quarters. Nicholson the benefit from a weaker dollar will be offset by worsening results in the U.S.
She expects sales to decline in North America amid a difficult retail environment, while sales will likely rise in China, Latin America and Central and Eastern Europe.
Buckingham Research Group analyst Alice Beebe Longley also expects stronger growth overseas than domestically, she wrote in a note on Wednesday.
"We assume that the weak economy in the U.S. combined with poor inventory controls put North American sales down 5 percent in the first quarter, and profits here down 22 percent," Beebe Longley wrote.
However, Avon only generates about 24 percent of sales in North America.
"Meanwhile, the dollar weakened through the quarter, and developing and emerging markets overall apparently continue to enjoy vigorous growth," she wrote.
WHATS AHEAD: Analysts are looking for details about the company's restructuring plan savings.
STOCK PERFORMANCE: Shares were flat during the quarter.
