WRAPUP 1-Avon faces profit hit in Venezuela, beauty shares fall

* Avon to take Q1 charge related to Venezuela currency

* Avon shares fall 5.43 pct, Sally Beauty falls 2.63 pct

* Other beauty company share prices fall

* Exception Nu Skin rises 6.57 pct on profit forecast

By Dhanya Skariachan

NEW YORK, Feb 4 (BestGrowthStock) – Avon Products Inc (AVP.N: ) said
on Thursday that currency devaluation in Venezuela would hurt
its profit this year, sending shares down more than 5 percent
even as it reported a quarterly profit that met Wall Street’s
expectations.

Shares of other companies in the beauty products and
cosmetics business also fell, even though Avon and rival Sally
Beauty Holdings Inc (SBH.N: ) reported quarterly profits on
Thursday that met Wall Street’s expectations.

Sally Beauty shares fell 2.63 percent on the New York Stock
Exchange. Estee Lauder (EL.N: ), Revlon (REV.N: ) and Bare
Escentuals (BARE.O: ) shares also fell. Their declines came as
other U.S. stocks (Read more about the stock market today. ) tumbled as the number of Americans claiming
jobless benefits rose unexpectedly.

Venezuela largely depends on imports for consumer goods and
the devaluation of its currency, the bolivar, means that many
products will cost more for people who live there.

That hurts many U.S. companies that do business there. That
includes Avon, the world’s largest direct seller of cosmetics,
which said about 5 percent of its sales in the first nine
months of 2009 came from Venezuela. [ID:nN11158065]

The company said the devaluation could take about $85
million off its 2010 operating profit. It plans to take a $50
million charge because of it in the first quarter.

“We believe this (Venezuela impact) may be meaningfully
more than many had suspected,” Sanford Bernstein analyst Ali
Dibadj said in an e-mail.

Avon’s news about Venezuela came on the same day that the
company reported a fourth-quarter profit (Read more your timing to make a profit.) excluding items of 68
cents, in line with what analysts on average were expecting,
according to Thomson Reuters I/B/E/S.

The company’s fourth-quarter net income was $269.4 million,
or 62 cents a share, up from $232.4 million, or 54 cents a
share, a year ago. Its revenue rose 13 percent to $3.15
billion, slightly beneath Wall Street estimates.

The results reveal tepid North American demand for Avon’s
and other beauty companies’ products, even as overseas sales
helped them in the fourth quarter.

Beauty supply and hair products distributor Sally Beauty
posted a fiscal first-quarter profit (Read more your timing to make a profit.) in line with expectations.
Sales rose 9 percent to $704.9 million, topping estimates, as
shoppers save money by doing their hair at home instead of
getting it done at the salon.

The company said its international business improved, and
that it was getting its source material at cheaper prices.
[ID:nN02103448]

Even so, shares fell. The results were “generally solid,”
said Oppenheimer analyst Joseph Altobello, but he added that he
was “a bit surprised this did not lead to better gross margin
expansion, and higher corporate expenses partially offset the
top line growth.”

Smaller rival Nu Skin reported better-than-expected sales,
helped by a gain of 7 percent from foreign currency (Read more about trading foreign currency.
fluctuations and a new skin care product. It forecast
first-quarter profit (Read more your timing to make a profit.) above market estimates. [ID:nSGE6120KM]

That made it one of the few beauty companies whose shares
rose. Nu Skin stock was up 6.57 percent to $26.60 on the NYSE.

Stock Today

(Reporting by Dhanya Skariachan; additional reporting by Vidya
Lakshmi and Shobhana Chadha in Bangalore. Editing by Robert
MacMillan)

WRAPUP 1-Avon faces profit hit in Venezuela, beauty shares fall