Avon Reports 3Q Total Revenue Up 14%

Avon Products, Inc. reported that third quarter 2007 total revenue grew 14% year over year (8% in local currency) to $2.3 billion, with all six operating regions contributing to the company’s revenue growth. Sales of Beauty products rose 16% and Active Representatives increased 10%. Units sold increased 8% versus the prior-year quarter. Net income in the third quarter 2007 was $139 million compared with $86 million in the year-ago quarter. Earnings per share were $.32 versus $.19 per share in the prior-year quarter, representing a 68% increase.

“We are pleased with Avon’s progress in the third quarter as we continue to implement our turnaround plan," said Andrea Jung, chairman and CEO, Avon. "The 14% revenue increase, including the 16% growth in beauty sales and a 10% advance in active representatives, reflects the benefits of significantly increased investments we’ve made in advertising and the Representative Value Proposition over the last two years. For full-year 2007, we remain on track to our targeted spending of $375 million in advertising and an incremental $100 million in Representative Value Proposition initiatives.

“Looking ahead to 2008, our analytics suggest that we are approaching the right levels of investment spending on advertising and the Representative Value Proposition needed to support long-term sustainable growth. Accordingly, we expect our investments next year will grow roughly in line with sales growth.

“This more stabilized level of investment, together with the projected benefits from our major initiatives of restructuring, Product Line Simplification and Strategic Sourcing, and decreased costs to implement those programs, support our expectation of an operating margin in 2008 that approaches 2005’s level.”
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