Avon Products Inc. (NYSE: AVP) reported fourth-quarter and full-year 2014 results before markets opened Thursday. For the quarter, the beauty products maker posted an adjusted diluted earnings per share (EPS) loss of $0.22 on revenues of $2.34 billion. In the same period a year ago, the company reported EPS of $0.34 on revenues of $2.67 billion. Fourth-quarter results compare also to the Thomson Reuters consensus estimates for EPS of $0.25 and $2.35 billion in revenues.

For the full year, Avon posted an EPS loss of $0.53 on revenues of $8.85 billion, compared with EPS of $1.02 on revenues of $9.96 billion in 2013. Analysts were looking for EPS of $0.80 on revenue of $8.87 billion.

About the only good news from Avon this morning is that it plans to continue paying its quarterly dividend of $0.06 per share (dividend yield of 2.7%).

Foreign exchange effects cut $0.22 from Avon’s quarterly EPS. Gross margin was 60.7%, so the 17% drop in revenues gets most of the blame, but the company enumerated several items:

• A non-cash income tax charge of $405 million ($0.92 per share), primarily due to lower projected foreign source income available to realize the company’s deferred tax assets. Avon blames this on foreign currency devaluations.
• Restructuring costs of about $38 million ($0.06 per share).
• A charge of $1 million on a remeasurement of Venezuelan assets.
• A net tax benefit of $19 million ($0.04 per share) related to settlement of the company’s fraud charges.
• A pretax charge of $8 million ($0.01 per share) to settle some pension obligations.

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CEO Sheri McCoy, who took over in April 2012, said:

While progress against our financial goals in 2014 was slower than I would have liked, I am pleased with the sequential improvements we made in several key markets and categories in the second half of the year. … Going into 2015, we intend to build on that momentum. However, based on strengthening of the U.S. dollar, we expect the impact of foreign currency on our reported results to be significant. We are working to mitigate as much of the impact as possible. Avon has weathered emerging market cycles in the past and I’m confident we will do so again.

We noted last month that McCoy’s tenure as CEO of Avon was in jeopardy. In the nearly three years that she’s been at the helm, the promised turnaround has never materialized. Granted that neither she nor Avon has much control over currency fluctuations, but it is not as if the strengthening dollar caught everyone by surprise. And McCoy’s comment is that next quarter will be equally bad. The company’s outlook statement includes a hit of 12% to revenue in the first quarter due to currency issues, and Avon only says that currency translation will have a “significant negative” impact on adjusted operating profit.

Investors appear to be losing patience. Avon’s shares were down 3.5% in Thursday’s premarket trading to $8.28, in the stock’s 52-week range of $7.25 to $15.80. The consensus target price for the shares was around $10.20 before the report.

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