Avon Predicts Sales will Grow 11% in Third Quarter

Avon Products Inc., New York, NY, reaffirmed its earnings outlook for the third quarter and full-year2004 today.Earnings in the third quarter are expected to increase 21% to $0.34 a share, while full-yearearnings are expected to rise 24% to $1.72 a share.

Avon executives said sales should increase 11% in both dollars and local currencies in the thirdquarter, driven by a projected 13% gain in sales of beauty products, as well as expected 10% growthin the number of active representatives and 14% unit volume growth.

Operating profit in the third quarter is expected to about 20% versus prior-year, including incrementalconsumer and strategic investments of $10 million. Operating margin is forecast to expand in the rangeof 100 basis points, attributed to net benefits from the company’s business transformation initiativesas well as operating leverage.

Andrea Jung, Avon’s chairman and chief executive officer, commented, “On a consolidated basis, ourbusiness in the third quarter is demonstrating continued double-digit strength across every keyperformance metric. Our international regions are each expected to generate double-digit gains inlocal currency sales, units and active Representatives. Operating profit should be up strongly as well,and overall, international operations should post operating margin expansion of over 200 basis pointsin the third quarter. This robust strength in our international business portfolio is fully offsetting softnessin the U.S., where lower-than-expected consumer response to recent brochure offers is impacting results.

“Looking ahead, on a full-year basis, we remain very comfortable with our earlier earnings estimate of$1.72 per share, reflecting the continued broad- based strength of our international operations, as wellas anticipated improvement in our U.S. business in the fourth quarter,” Ms. Jung continued. “The powerof our global portfolio, coupled with the financial flexibility provided by our business transformationinitiatives, position us well to achieve our 2004 earnings target.”