Avon 2014 Annual Report Download - page 53

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• a benefit of 1.9 points due to higher gross margin caused primarily by 1.5 points from the favorable net impact of mix and pricing.
Benefits from pricing include the realization of price increases in advance of costs in markets experiencing relatively high inflation
(Venezuela and Argentina), while mix negatively impacted gross margin due to higher growth in Fashion & Home. In addition, there were
various other insignificant items that favorably impacted gross margin. These items were partially offset by .6 points from the unfavorable
impact of foreign currency transaction losses; and
• a decline of .5 points from higher transportation costs, primarily in Venezuela.
Europe, Middle East & Africa – 2014 Compared to 2013
%/Point Change
2014 2013 US$ Constant $
Total revenue $2,705.8 $2,898.4 (7)% 1%
Operating profit 300.9 406.7 (26)% (18)%
CTI restructuring 23.2 17.7
Adjusted operating profit $ 324.1 $ 424.4 (24)% (16)%
Operating margin 11.1% 14.0% (2.9) (2.6)
CTI restructuring .9 .6
Adjusted operating margin 12.0% 14.6% (2.6) (2.4)
Change in Active Representatives (1)%
Change in units sold –%
Amounts in the table above may not necessarily sum due to rounding.
Total revenue decreased 7% compared to the prior-year period, due to the unfavorable impact from foreign exchange. On a Constant $
basis, revenue grew 1%. The region’s Constant $ revenue was negatively impacted by approximately 1 point as a result of the closure of the
France business.
In Russia, revenue declined 18%, which was unfavorably impacted by foreign exchange. On a Constant $ basis, Russia’s revenue declined
1%, primarily due to a decrease in Active Representatives, partially offset by higher average order. Russia was negatively impacted by a
difficult economy, including the impact of geopolitical uncertainties. Russia’s Constant $ revenue decline in the first half of 2014 was
partially offset by Constant $ revenue growth in the second half of 2014, driven by actions to improve unit sales. In the United Kingdom,
revenue increased 6%, which was favorably impacted by foreign exchange. On a Constant $ basis, the United Kingdom’s revenue increased
1%, primarily due to higher average order, partially offset by a decrease in Active Representatives. In Turkey, revenue declined 14%, which
was unfavorably impacted by foreign exchange. On a Constant $ basis, Turkey’s revenue declined 2%, primarily due to lower average order.
In South Africa, revenue declined 3%, which was unfavorably impacted by foreign exchange. On a Constant $ basis, South Africa’s revenue
increased 8%, primarily due to an increase in Active Representatives.
Operating margin was negatively impacted by .3 points as compared to the prior-year period from higher CTI restructuring. Adjusted
operating margin decreased 2.6 points, or 2.4 points on a Constant $ basis, primarily as a result of a decline of 2.2 points due to lower gross
margin caused primarily by an estimated 3 points from the unfavorable impact of foreign currency transaction losses, partially offset by 1.0
point from lower supply chain costs.
A V O N 2014 45