Avon Expects to Reach Earnings Targets

Avon Products, Inc. said today that it expects to report fourth quarter and full year earnings that are in line with Wall Street expectations and the guidance provided by the company in October. Avon also indicated that it is comfortable with analysts’ estimates for earnings in 2001.

Earnings for the fourth quarter, to be reported on or around January 25, are expected to be in line with the consensus estimate of $.65 per share. For the full year, earnings are expected to be $1.87 per share, which would be a 14% increase over 1999 and solidly within the target of low to mid-teens growth set by the company at the beginning of the year.

Sales growth for the fourth quarter is expected to be in the 4-5% range, after an approximate 5% negative impact from foreign currency translation. Local currency sales are expected to be up in the high single digits, driven by continued solid growth in units and representatives.

For the full year, sales are expected to be up approximately 7%, which is at the high end of the company’s target range, despite a steady strengthening of the dollar during 2000. Sales in local currencies for the year should be up approximately 11%.

Commenting on the outlook for 2001, Avon’s president and chief executive officer, Andrea Jung, said: “We intend to build on the momentum we have established this year, when we invested an additional nearly $100 million to strengthen Avon’s brand image and direct selling channel. We will continue to increase strategic spending in our core business next year while also funding new growth opportunities. Equally important, we expect to deliver another year of solid sales and earnings growth in 2001.”

Ms. Jung said Avon is targeting sales growth for 2001 in the mid single digit range, despite an estimated negative foreign currency impact of 6%. Local currency sales are planned to rise double digits again, reflecting strong fundamentals in the company’s worldwide direct selling operations.

Regarding the outlook for earnings next year, Ms. Jung said, “Based on everything we see right now, we’re comfortable with the range of $2.10 to $2.12 per share that most analysts are estimating, even after continued healthy increases to fund our growth strategies in 2001.

“We think our goals are realistic and achievable and we are confident we will continue to deliver value for our shareholders in 2001 on top of a strong 2000,” Ms. Jung added.