Avon’s Becoming is Coming to J.C. Penney and Sears

Executives at Avon Products Inc. predicted its new line of makeup and skin care products, which begin selling in the second half of next year at Sears, Roebuck & Co. and J.C. Penney Co. stores, will generate $200 million to $300 million in revenues by 2005.At the same time, however, the company said it remains committed to the Avon lady and will invest $100 million in its direct-sales team.The new product line, called Becoming, ranging from cosmetics and creams to accessories and vitamins, will be available in 150 to 200 Avon Center boutiques inside the retail stores, said Andrea Jung, Avon’s president and chief executive officer. Becoming will be more expensive than Avon’s core products, and will cater to a younger and more educated customer than Avon’s traditional business. Avon’s new line targets the 25-to-45 age group, compared with Avon’s traditional customer, who is typically from age 40 to 55. Lipsticks under the Becoming label will be priced at about $6.50, compared to $3 for Avon’s core business.

Door-to-door sales will still account for 95% of Avon’s revenues, down from about 98%, Jung said. But in-store sales are expected to grow as Avon plans to expand the Becoming line into 500 stores by 2002. With its launch, Avon seeks to redefine the beauty market. “There’s a real void in the beauty market. A lot of (brands) focus on the physical aspects of beauty. This is about who you are and what you are becoming,” said Joe Feranda, group vice president of strategic planning and marketing. The company is developing a TV and print ad campaign, created by J. Walter Thompson. Avon will share marketing expenses with its retail partners.

Pledging its commitment to its 3 million worldwide Avon representatives, of which 500,000 are in the U.S, the company also gave more details about its new Internet initiative, which promotes representatives online. Avon launched Avon.com three years ago with a limited number of products, but its newly revamped site, launched Wednesday, offers consumers an option to deal directly with an Avon representative. So far, 16,000 of its Avon representatives have signed up to be what the company calls “Erepresentatives.” Avon aims to have 45,000 next year. The online site is expected to have all its products online by fall.

Andrea Jung, president and chief executive officer, said the Internet initiative gives its representatives new opportunities to make extra money, while still continuing a relationship with its customers. Company officials said that the company’s sales and earnings for the year were on track. For the third quarter, revenue is expected to rise by the mid-to-high single digits and earnings growth should be in the low to mid teens, meeting the 38 cents-a-share consensus of analysts surveyed by First Call/Thomson Financial. Analysts were less than enthusiastic about the company’s choice of retail partners.

“I was a little disappointed in the partners they picked,” said Amanda Tepper, an analyst at Chase H & Q., adding that she would have preferred a retailer like Target. Tepper reasoned that Avon probably couldn’t team up with a mass merchant for fear it may cannibalize its core business.”They are walking a fine line,” she said.