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Avon Reports Revenue of $2.6 Billion for Q3 2009

Posted: October 29, 2009

Avon Products, Inc. reported third quarter 2009 total revenue of $2.6 billion, 4% lower than that of 2008's third quarter, but up 7% on a local-currency basis as foreign exchange pressured growth by 11 percentage points. Beauty sales in the third quarter of 2009 were 3% lower versus the prior-year period, but increased 8% on a local-currency basis. Active Representatives grew 10%, with growth in all regions. Units overall rose 5% versus the prior-year quarter and beauty units increased 6%.

Avon's 8% local-currency growth in beauty sales included gains in all categories: fragrance, color cosmetics, skin care and personal care grew 9%, 17%, 1%, and 7%, respectively. On a reported basis, these growth rates were -4%, +4%, -8% and -4%, respectively.

"We are pleased with the third quarter's 7% local-currency-revenue growth, particularly in this economic environment," said Andrea Jung, Chairman and CEO, Avon. "Our broad-based strength is proof that our strategies to focus on representative recruiting and Avon's 'Smart Value' products are working. Active Representatives and beauty revenue both grew strongly as we expanded representative coverage and beauty market share across our portfolio."

Third-quarter 2009 gross margin of 62.6% was 50 basis points below that of the prior-year quarter. Strong manufacturing productivity gains, benefits from the company's Strategic Sourcing Initiative, and strategic price increases offset most of 140 basis points of unfavorable transaction-exchange impact on 2009 gross margin.

Latin America's third-quarter 2009 revenue was 5% higher year over year, or up 18% on a local-currency basis. Local-currency revenue increased 22% in Brazil, 7% in Mexico and 24% in Venezuela, which, on a reported basis, were +7%, -18% and +24%, respectively. The region's Active Representatives grew 13%, and units sold were up 10%. Operating profit was 7% lower (but increased 4% in local currency) due primarily to the impact of unfavorable foreign exchange. Latin America's third-quarter operating margin was 17.3%.