Beauty Industry

Beauty Revenues Rise at Avon

Largest percentage comes from Latin America

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By: Jamie Matusow

Editor-in-Chief

Fourth-quarter revenue rose 13% to $3.2 billion, active representatives grew 11% and beauty sales climbed 15% according to Avon Products, Inc.’s reported fourth-quarter 2009 total revenue. The $3.2 billion result was 13% higher than that of fourth-quarter 2008, or 8% higher on a local-currency basis. Active Representatives grew 11% with growth in all regions. Beauty sales in the fourth-quarter 2009 grew 15% driven by gains in fragrance, color cosmetics, and personal care of 11%, 27%, and 19%, respectively. On a local-currency basis, Beauty sales grew 9%, as fragrance, color cosmetics, and personal care sales grew 7%, 19%, and 13%, respectively. Units sold increased 4% in the quarter, and beauty units were up 5% versus a year ago.

Latin America showed the strongest growth, while fourth-quarter revenue in North America declined 7% (down 9% on a local-currency basis). Fourth-quarter 2009 revenue in China also declined—8% versus the fourth-quarter 2008 with no impact from foreign exchange.

Fourth-quarter 2009 revenue in Latin America grew 29% (up 14% on a local-currency basis) compared to the fourth-quarter 2008, driven by local-currency sales growth of 12% in Brazil, 32% in Venezuela and 19% in Colombia.

Revenue for the period was also up in Central and Eastern Europe (12%); Western Europe, Middle East & Africa (20%); and Asia Pacific (13%).

Active Representativesin the U.S. increased 3% versus the prior-year quarter. Units sold were 7% lower versus the prior year. The region’s revenue continued to be pressured by lower consumer spending and nearly double-digit declines in non-Beauty sales (Fashion and Home categories). Operating profit decreased 14% (down 18% in local currency) versus the 2008 quarter, primarily due to lower revenue. The region’s operating margin was 6%.

Commenting on the company’s revenue growth, Andrea Jung, Avon’s chairman and chief executive officer, said, “We are very pleased with Avon’s performance in the fourth quarter. Against the backdrop of the global economic crisis, our growth strategy to leverage our smart-value product offering and Representative earnings opportunity paid off to deliver robust Active Representative growth and beauty market share gains in the quarter. We are especially pleased that revenue growth was broad-based across our geographic portfolio. Our Western Europe and Central and Eastern Europe regions, when combined, represent 30% of fourth-quarter revenue and together grew more than 15% (17% in local currency), while Latin America delivered another quarter of double-digit growth.”

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