Avon Products Inc., the door-to-door cosmetics seller conducting an internal bribery probe, rose the most in two months after saying it will cut jobs and identify other ways to reduce costs.
Avon increased 2.3 percent to $17.93 at 2:54 p.m. in New York, after earlier rising 5.4 percent for the biggest intraday gain since Dec. 14.
Chief Financial Officer Kimberly Ross said today on a conference call that the company has opportunities to reduce its headcount immediately. Avon is working with McKinsey & Co. to restructure its global operations and cut costs in North America, a person familiar with the matter said yesterday.
Fourth-quarter profit excluding restructuring costs and expenses related to its Silpada jewelry business totaled 39 cents a share, New York-based Avon said today in a statement. Analysts projected 53 cents, the average of estimates compiled by Bloomberg. Avon said sales declined and costs increased during the quarter amid higher distribution expenses.
Avon is looking to replace Chief Executive Officer Andrea Jung after slowing sales and internal probes prompted a 40 percent drop in its shares last year. Jung said on the call that the CEO search was “proceeding well.”
“They’re going to address what they can and what they know should be addressed no matter who the next CEO is,” Connie Maneaty, an analyst at BMO Capital Markets in New York, said today in a telephone interview. “This is a long turnaround story -- it’s not going to happen anytime soon.”
Maneaty rates the shares “outperform.”
The company is investigating potential violations of the Foreign Corrupt Practices Act, which outlaws bribing foreign officials. Avon also said in October that the U.S. Securities and Exchange Commission is probing the company’s foreign operations and its dealings with analysts.
Avon said it will update investors on the investigation after a new CEO has been hired. The company announced in December it will split the chairman and CEO roles. Jung, who has led Avon since 1999, will remain chairman.
Fourth-quarter revenue fell 4.2 percent to $3.04 billion.
The net loss totaled $400,000, or breakeven on a per-share basis, compared with net income of $229.5 million, or 53 cents, a year earlier, Avon said. The results included non-cash expenses of $263 million to write down its Silpada unit’s goodwill because of the rise in silver prices.
Avon purchased Silpada, a jewelry company focused on sterling silver, in 2010 for about $650 million to broaden its product line.
Last month, former vice chairman Charles Cramb became the highest-ranking executive to leave in connection with the probes. Cramb had served as head of Avon’s developed market group and previously as CFO.
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