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Avon 2Q adj. profit beats expectations

NEW YORK (AP) -- Avon's second-quarter net income slumped 48 percent as currency exchange rates and an asset sale dragged on the quarter, but it beat Wall Street expectations and shares hit a new high for the year.

The company also said that an offer to settle overseas bribery allegations for $12 million was rejected by U.S. authorities. Avon has wrestled with the investigation since 2008, when it contacted the U.S. Justice Department and the Securities and Exchange Commission to notify them of possible inappropriate actions in China.

The investigation has since spread to other countries.

The beauty products company earned $31.9 million, or 7 cents per share, for the three months ended June 30. That's down from $61.6 million, or 14 cents per share, a year ago.

The quarter included a $79 million charge related to an expected loss on the sale of the Silpada jewelry business. Avon announced in July that it was selling Silpada back to its co-founders and their families for $85 million, much less than what it paid three years ago. Silpada sells sterling silver jewelry at home parties. Avon purchased Silpada Designs in July 2010 for $650 million. Silpada was classified as discontinued operations in the current quarter.

Taking out Venezuela-related charges and other items, earnings from continuing operations were 29 cents per share, which was 2 cents better than Wall Street had expected, according to a FactSet survey.

Revenue slipped 2 percent to $2.51 billion due to currency rates and North American sales.

Analysts were looking for revenue of $2.58 billion.

The company said Thursday that it had made an offer of $12 million to settle bribery allegations with U.S. authorities, but said the offer was rejected.

"Although we expect that the DOJ and the SEC will make a counterproposal to our offer, they have not yet done so," the company said in a regulatory filing Thursday. "Our discussions with the DOJ and the SEC are ongoing."

Sales in North America declined 12 percent, hurt by a 13 percent drop in the number of active sales representatives. Asia-Pacific sales fell 9 percent, while sales in Latin America and Europe, the Middle East and Africa rose.

Avon said its revenue performance climbed 2 percent on a constant dollar basis. Prices rose in the quarter, while the average order size increased.

Avon's tax rate from continuing operations was 41.8 percent compared with 30 percent in the prior-year period, stung by Venezuelan currency devaluation and a $12 million accrual tied to bribery investigations. A bribery probe started in China in 2008 and has since spread to other countries.

Shares of Avon Products Inc. rose more than 5 percent to hit a 52-week high of $24.66, but slid later in the day to trade at $21.80.