Avon Gives Weak U.S. Outlook

Executives at Avon Products, Inc. announced an approximate 5% U.S. sales drop for the fourth quarter of 2004. In 2005, U.S. sales are expected to decline slightly, with U.S. sales and profit growth to resume in 2006. The company blamed curbed consumer spending. In addition, growth in active U.S. representatives is expected to fall slightly compared to last year’s fourth quarter.

However, the company was optimistic about its overall per-share profit, with an expected rise of at least 10% a year from 2005-2007.

Avon plans to phase out certain categories from its lineup, including toys, but will introduce other items, such as plus-size intimate apparel, executives revealed. Avon will also promote “beauty on a budget”-items that cost less than $10-to entice cost-conscious women.

The company forecast local currency sales to rise 10% a year from 2005-2007 due to expansion abroad. Meanwhile the company will discontinue toy sales in 2005 and will withdraw certain products in the Beyond Beauty line during the next two years. Executives said sales should rise in China, Russia and Turkey during the next three years.