Avon Products, Inc. reported second-quarter 2009 total revenue of $2.5 billion, 10% lower than that of 2008's second quarter, but up 5% on a local currency basis as foreign exchange pressured growth by 15 percentage points. Beauty sales in the second quarter 2009 were 10% lower versus the prior year period, but increased 5% on a local currency basis.
"Our bold strategies to counter the recession are working," said Andrea Jung, chairman and CEO, Avon. "We've been successful at gaining representatives and consumers during these tough economic times. This confirms our belief in the inherent advantage of our direct-selling business model. As women around the globe are seeking income and smart value products, Avon is there to meet their needs. From an earnings perspective, our results included substantial costs associated with our recently launched 2009 restructuring program. These actions reflect our continuing determination to transform our cost structure to help fund growth. Our focus on driving market share gains, coupled with a constant turnaround mentality, reflects our commitment to emerge as a stronger and more competitive company."
Avon's beauty sales decreased 10%, but were up 5% in local currency in the second quarter. On a local-currency basis, fragrance, color cosmetics, personal care and skin care grew 8%, 7%, 6% and 1%, respectively. On a reported basis, fragrance, color cosmetics, personal care and skin care sales-growth rates were -9%, -9%, -10% and -12%, respectively.
Second-quarter 2009 gross margin of 62.2% was 150 basis points below that of the prior year quarter, as price increases, manufacturing productivity gains and benefits from the company's strategic sourcing initiative helped to mitigate 210 basis points of unfavorable transaction-exchange impact.
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