AVP: Why Avon Stock Is Looking Ugly Today

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Shares of Avon Products (AVP) tumbled about 13% in Thursday midday trading after AVP posted a wider quarterly loss and said it would pay $135 million to settle a federal investigation.

avon-makeup-630 AVPDuring the first quarter, AVP reported a loss of $168.3 million. It posted a loss of $13.7 million during the year-ago period. Adjusted EPS from continuing operations came in at 12 cents, far below the 21 cents that Wall Street had expected. Revenue from North America sank 22%, while Asia Pacific revenue dropped 17%. Total quarterly revenue of $2.18 billion was down 11% from the prior-year period and fell short of the $2.2 billion that analysts had forecast, the Associated Press notes.

The settlement includes payments of $68 million to the U.S. Department of Justice and $67 million to the Securities and Exchange Commission (SEC). The government was probing Avon over allegations that it violated the Foreign Corrupt Practices Act by using bribery to boost sales outside the U.S. The federal investigation into AVP was launched in 2008.

In addition to the financial payments, AVP has accepted an external monitor to ensure its compliance with the settlement agreement. The compliance monitor will be in place for 18 months. Following that, AVP must monitor itself for another 18 months. If Avon complies with the settlement, the government will defer criminal charges against the company for three years.

On Wednesday, Avon stock closed at $15.28 per share.

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Article printed from InvestorPlace Media, https://investorplace.com/2014/05/avp-avon-stock-looking-ugly-today/.

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