Avon Products' second-quarter net income fell 70 percent, hurt by the stronger dollar and lower demand globally for its makeup and skin care products.
The maker of beauty products including Skin So Soft lotion and mark cosmetics also said it has begun talks with federal investigators to possibly settle a long-running probe into allegations of bribery overseas.
That news was not enough to offset the earnings miss, however, and shares fell 3 percent in premarket trading.
The results announced Wednesday showed yet another lackluster performance for the direct-selling company, which has struggled for three years to turn around results. The slump led to the ouster of longtime CEO Andrea Jung and the hiring of Sheri McCoy, a former Johnson & Johnson executive, in April.
"Avon's second-quarter financial results are not good and they reflect the complex challenges that Avon faces," said McCoy. "It will take time, but I am confident that we can turn the business around and reach a point of sustainable growth."
For the April to June quarter, net income fell to $61.6 million, or 14 cents per share. That's down from $206.2 million, or 48 cents per share, a year ago.
Excluding one-time items related to restructuring, net income totaled 20 cents per share. Analysts surveyed by FactSet expected 21 cents per share.
Revenue fell 9 percent to $2.59 billion from $2.86 billion last year. Analysts expected revenue of $2.68 billion.
Its shares fell 49 cents, or 3.2 percent, to $15 in premarket trading. The stock is down 11 percent since the beginning of the year.
New York-based Avon Products Inc. says revenue fell across all regions, with a 9 percent drop in Latin America, its largest region. Excluding the stronger dollar, however, revenue rose 3 percent in the region, helped by a 26 percent jump in revenue in Venezuela due to price increases.
Revenue in Europe, the Middle East and Africa fell 14 percent, hurt by weakness in Russia, Turkey and the U.K.
In North America, revenue fell 6 percent, hurt by lower representatives and lower revenue from its Silpada jewelry division. Asia Pacific revenue fell 4 percent as problems with transitioning to a direct-selling business in China contributed to a 21 percent drop in revenue.
Meanwhile, the company said it is on the way to settling a federal investigation into possible violations of the Foreign Corrupt Practices Act.
Avon began investigating possible bribery by its employees in China in 2008. That investigation has spread to other countries and the U.S. Securities and Exchange Commission and the Justice Department have gotten involved. Avon's own probe has led to the departure of former vice chairman Charles Cramb in January and four other executives in January 2011.
In a filing with the Securities and Exchange Commission accompanying the earnings release on Wednesday, Avon said it is in discussions with the SEC and the Department of Justice "regarding mutually resolving the government investigations," but it said there's no assurance they will actually reach an agreement.
Separately, Avon declared a dividend of 23 cents, payable on Sept. 4 to shareholders of record on Aug. 15.
