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Avon’s 4Q Earnings Beat Wall Street’s Estimates

March 6, 2007

Avon Products Inc. showed signs that its turnaround efforts are starting to take hold as it reported that fourth-quarter profits and revenues beat Wall Street estimates.

The New York-based direct seller of cosmetics and other beauty products said it earned $184.1 million for the three-month period ended Dec. 31 2006, compared with $183.2 million in the year-ago period. Avon earned $477.6 million for the year 2006 and revenue rose 8% to $8.76 billion.

Revenues, boosted by strong sales of beauty products and strong performances in Latin America and China, rose 9% to $2.62 billion from nearly $2.4 billion in the year-ago period. Analysts expected revenues of $2.5 billion for the fourth-quarter.

In November 2005, Avon announced a multiyear restructuring plan involving job cuts and outsourcing to countries where labor costs are cheaper.

Late last year, Avon launched two initiatives—simplifying product lines with a focus on better performing and more profitable products, and expanding its global sourcing of products. Avon also announced that it would close two of its distribution centers and build a new one as part of a restructuring of its U.S. distribution operations.
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