What happened

Avon Products (NYSE:AVP) shares were heading lower today as the struggling cosmetics company issued another disappointing earnings report. Revenue fell below expectations, and the company continued to lose direct sales representatives. Shares were down 8.4% as of 1:01 p.m. EDT. Investors seemed frustrated with the lack of progress in the company's Open Up Avon turnaround strategy.

So what

Avon said revenue fell 14%, but just 3% in constant currency, to $1.18 billion, which missed analyst estimates at $1.24 billion. Active representatives declined 9%, falling in all segments, especially in Brazil and Russia.

A woman putting on mascara.

Image source: Getty Images.

Adjusted gross margin declined 160 basis points to 56.8% due in part to currency exchange, though rising prices and a change in sales mix helped margins. Adjusted earnings per share improved from a $0.02 loss a year ago to $0.03, topping estimates at breakeven.

CEO Jan Zijderveld said: "We are pleased with the progress that we have made in the first quarter. We delivered constant-dollar revenue improvements in three of our four geographical segments, adjusted operating margin expansion of 50 basis points and free cash flow in line with seasonal trends, as we continue to make progress deploying our Open Up Avon strategies."

Now what

Zijderveld went on to say that average orders were up 6% in the quarter and overall price/mix was up 8% in the quarter. However, the overall decline in revenue and sales representatives shows that orders are falling, a key concern to address.

Avon shares have nearly doubled this year because investors have been encouraged by new leadership, a cost-cutting plan, and the Open Up Avon strategy. But the latest report shows that the company still has a long way to go to turn around the fundamentals. Avon will continue to be a high-risk, volatile stock for the foreseeable future.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.