02.03.09
Avon Products, Inc. today posted fourth-quarter 2008 total revenue of $2.8 billion was 9% lower than 2007 as the impact of a substantial shift in many foreign-currency exchange rates. For full-year 2008, the company reported that total revenue grew 8% to a record $10.7 billion.
Fourth-quarter 2008 operating profit was $372 million, up 66% from last year, while full-year 2008 operating profit jumped 53% to $1.3 billion.
Active representatives grew 4% and 7% year over year in the fourth quarter and full year 2008, respectively.
Beauty sales in the fourth quarter 2008 were 7% lower versus the prior-year period as the impact of foreign exchange more than offset a local-currency increase of 4%, which was driven by growth in all categories, particularly: fragrance and skin care. For the full year, beauty sales rose 10%, said the report.
Advertising expense decreased 7% in the fourth quarter to $100 million. On a full-year basis, advertising increased 6% to $391 million.
Andrea Jung, chairman and chief executive officer of Avon, commented, "After nine months of strong sales performance, the significant negative impact of foreign exchange and the depressed economy hurt our fourth-quarter revenue performance.
"It is prudent to assume these pressures will continue for the foreseeable future, and we therefore anticipate that 2009 will be a challenging year. While we cannot control movements in foreign currency, our focus, as always, will be on building and managing our business for the long term, and continuously driving our costs lower as part of our 'constant turnaround mentality.'
"We believe our model is well suited to create income opportunities in these difficult economic times, as we have during past challenges. Our model also allows us to emphasize "smart value" products in the Avon brochure. Such products have always been a hallmark of our brand, and are even more attractive today given our improvements in product innovation and brand image. Throughout our history, these advantages have allowed Avon to emerge well positioned as economic conditions improve.
"In terms of our cost structure, we intend to take significant additional steps to transform our value chain, as well as to aggressively reduce non-strategic spending in the current year. Our success with cost transformation as part of our turnaround has proven our ability to move swiftly and boldly to address key opportunities.
"We are fortunate to be facing these challenging times from a position of financial strength. We have a solid balance sheet, an operating model that generates healthy cash flow and a continued commitment to our dividend. This strong foundation, coupled with the continuing execution of our turnaround strategies and the competitive advantages of our direct selling business model, gives us confidence to look past 2009's challenges and to continue our focus on long-term sustainable, profitable growth," concluded Jung.
Fourth-quarter 2008 operating profit was $372 million, up 66% from last year, while full-year 2008 operating profit jumped 53% to $1.3 billion.
Active representatives grew 4% and 7% year over year in the fourth quarter and full year 2008, respectively.
Beauty sales in the fourth quarter 2008 were 7% lower versus the prior-year period as the impact of foreign exchange more than offset a local-currency increase of 4%, which was driven by growth in all categories, particularly: fragrance and skin care. For the full year, beauty sales rose 10%, said the report.
Advertising expense decreased 7% in the fourth quarter to $100 million. On a full-year basis, advertising increased 6% to $391 million.
Andrea Jung, chairman and chief executive officer of Avon, commented, "After nine months of strong sales performance, the significant negative impact of foreign exchange and the depressed economy hurt our fourth-quarter revenue performance.
"It is prudent to assume these pressures will continue for the foreseeable future, and we therefore anticipate that 2009 will be a challenging year. While we cannot control movements in foreign currency, our focus, as always, will be on building and managing our business for the long term, and continuously driving our costs lower as part of our 'constant turnaround mentality.'
"We believe our model is well suited to create income opportunities in these difficult economic times, as we have during past challenges. Our model also allows us to emphasize "smart value" products in the Avon brochure. Such products have always been a hallmark of our brand, and are even more attractive today given our improvements in product innovation and brand image. Throughout our history, these advantages have allowed Avon to emerge well positioned as economic conditions improve.
"In terms of our cost structure, we intend to take significant additional steps to transform our value chain, as well as to aggressively reduce non-strategic spending in the current year. Our success with cost transformation as part of our turnaround has proven our ability to move swiftly and boldly to address key opportunities.
"We are fortunate to be facing these challenging times from a position of financial strength. We have a solid balance sheet, an operating model that generates healthy cash flow and a continued commitment to our dividend. This strong foundation, coupled with the continuing execution of our turnaround strategies and the competitive advantages of our direct selling business model, gives us confidence to look past 2009's challenges and to continue our focus on long-term sustainable, profitable growth," concluded Jung.