What happened 

Beauty product specialist Avon (NYSE:AVP) stock sank 28% in May according to data provided by S&P Global Market Intelligence.

AVP data by YCharts.

The slump has contributed to a rough run for investors lately, with shares down 12% in the past 12 months, compared to a 16% gain in the broader market.

So what

May’s decline was sparked by a first-quarter earnings report that didn’t deliver the operating rebound investors were hoping to see. Revenue dipped by 1% after accounting for foreign currency shifts, compared to the flat result Avon posted in the prior quarter and the 2% gain it showed for the full 2016 fiscal year. The company lost $37 million, or $0.10 per share, compared to a loss of $166 million, or $0.36 per share, a year ago.

A woman shops for beauty products.

Image source: Getty Images.

On the bright side, operating profitability improved thanks to a mix of cost cuts and higher prices. All told, management was happy with the results. “Our first quarter was broadly in line with our expectations and we remain confident in our strategic initiatives and the progress against our plan,” CEO Sheri McCoy said in a press release. 

Now what

Avon is currently in the second year of a three-year transformation plan that aims to put the retailer in position to generate consistently positive net income again. Investors had been hoping to see more progress on that score, with sales growth stabilizing and earnings turning higher. May’s results instead pointed to volatility ahead as Avon works to keep its army of direct sales representatives engaged in the business despite the soft selling environment.

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