Avon Products, Inc. reported fourth-quarter 2010 total revenue of $3.2 billion, 1% higher than that of fourth-quarter 2009. Constant dollar sales rose 5% in the fourth quarter. Full-year 2010 total revenue of $10.9 billion was 6% higher than that of 2009, and up 6% in constant dollars. Acquisitions contributed 1% to revenue growth during the year. Total Beauty unit sales were up 6% on both a reported and constant-dollar basis.
"As we closed out the year, we continued to experience disappointing sales results, which were negatively impacted by service disruptions in Brazil and weak performance in Russia," said Andrea Jung, Chairman and CEO, Avon. "Looking ahead, we are aggressively addressing execution challenges which dampened our second-half 2010 performance. Our business fundamentals remain solid, and we believe our strong field programs and innovation pipeline that begin in the second quarter of 2011 should drive another year of mid-single digit constant dollar revenue growth. We expect improvement in operating margin this year in line with our commitment to mid-teens operating margin by 2013."
Avon's Beauty sales declined 1% year over year during the fourth quarter of 2010, or up 2% in constant dollars. On a reported basis, fragrance was up 4%, personal care was up 3%, color was down 2%, and skin care was down 12% for the fourth quarter. Constant dollar revenue was up 9% in fragrance, up 6% in personal care, up 1% in color, and down 10% in skin care.
Fourth-quarter 2010 gross margin of 61.8% was 90 basis points below that of the prior-year quarter, due to higher product costs and adverse product mix which were partially offset by increased pricing.
Latin America's fourth-quarter 2010 revenue was up 5% year over year, or up 11% in constant dollars. On a reported basis, Brazil was up 4%, Mexico was up 20%, and Venezuela was down 27%. Constant dollar revenue growth was 2% in Brazil, 14% in Mexico and 47% in Venezuela. Brazil's results were significantly impacted by service disruptions during the quarter.
Fourth-quarter revenue in North America was up 1%, or flat in constant dollars. The acquisition of Silpada Designs Inc. ("Silpada") had a favorable impact on fourth-quarter revenue of approximately 11 percentage points. Adjusted operating profit was up 59%, with an adjusted operating margin of 10.8%, up 390 basis points as gross margin improvements and lower advertising helped to offset the impact of lower sales.
In Central and Eastern Europe, fourth-quarter revenue declined 6% year over year, or down 1% in constant dollars. Russia was down 3% on a reported basis and up 1% in constant dollars. Western Europe, Middle East and Africa's fourth-quarter revenue increased 9% versus the prior-year quarter or up 13% in constant dollars. The increase was driven, in part, by growth of Liz Earle Beauty Co. Limited ("Liz Earle"), which contributed approximately 3 percentage points to revenue growth.
Asia-Pacific's fourth-quarter revenue increased 8% year over year or up 1% in constant dollars. The Philippines was up 15% on a reported basis and up 7% in constant dollars. Avon Japan is now excluded from Asia Pacific and is reported as discontinued operations. Fourth-quarter revenue in China decreased 45% year over year, or down 47% in constant dollars. The region's revenues continued to be impacted by the company's planned transition away from a hybrid model to one which focuses on direct selling. Units sold decreased 44%. Despite the lower revenues, China reported operating profit of $4 million compared with a $3 million loss in last year's fourth quarter.
The full report is available on Avon's investor page.
