Emerging markets likely to boost cosmetics seller Avon’s 4th-quarter revenue

Earnings Preview: Avon Products Inc.

CINCINNATI — Cosmetics company Avon Products Inc. reports its fourth-quarter results before the stock market opens Thursday.

WHAT TO WATCH FOR: How Avon, which sells brands including Skin-So-Soft and Mark along with its namesake cosmetics, is doing in Latin America. Last quarter, North American sales fell as consumers cut back, but emerging markets were stronger, particularly Brazil, Avon’s largest market.

“We expect Brazil and Mexico to (again) help Latin America drive Avon’s growth in the quarter,” wrote UBS analyst Nik Modi.

Investors also will listen for Avon’s comments on its risk related to Venezuela’s devalued currency, though Modi said that risk is likely priced into the stock, which has fallen 9 percent since December.

Avon’s results also could offer important information on the job market. Avon has added thousands more sales people in the U.S. and abroad who are not employees; as workers everywhere seek new sources of income during the recession, the growth of this sales force could indicate a lack of opportunities elsewhere in the economy.

WHY IT MATTERS: Avon’s revenue in North America and worldwide shows how consumers are feeling about buying discretionary goods like makeup. U.S. consumer spending, including major expenses like health care and housing, is considered an important economic barometer because it accounts for about 70 percent of gross domestic product.

WHAT’S EXPECTED: Analysts polled by Thomson Reuters, who generally exclude one-time items from their estimates, expect earnings of 68 cents per share on revenue of $3.17 billion.

LAST YEAR’S QUARTER: Avon reported profit of 54 cents per share on revenue of $2.81 billion. It didn’t report any one-time items.