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Beauty Sales Up at Avon

December 4, 2007

Avon Products, Inc. reported that its third-quarter total revenue grew 14% to $2.3 billion with all six operating regions contributing to the company’s revenue growth. Sales of beauty products rose 16%, while units sold increased 8%.

Net income rose to $139 million. The quarter’s results included $96 million in advertising expenses, a 44% increase over prior year, to support the launch of new products as well as representative recruitment advertising in several markets. The 2007 quarter also included an incremental $37 million of costs for initiatives to improve Avon’s Representative Value Proposition (RVP), including continued implementation of Avon’s multi-level sales Leadership program, increased incentives and the rollout of a more frequent, three-week selling cycle in the Central and Eastern Europe region.

Third-quarter operating profit rose 33% to $224 million, while the operating margin was 9.5%, versus 8.1% in the prior-year quarter.

In an unrelated announcement, Avon’s board authorized the repurchase of $2 billion of the company’s common stock over a five-year period following completion of its current program. Through Sept. 30, 2007, Avon purchased 26 million shares at a total cost of $904 million under the existing program begun in late 2005.
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