Avon Reiterates Full-Year Earnings Goals

Avon Products Inc., New York, was said to have “never been stronger,” according to chairman and chief executive officer Andrea Jung. Yesterday the company outlined several goals for an even leaner, more efficient company.

Overall sales should be up anywhere from 4% to 6%, Ms. Jung insisted. Executives noted the company’s Argentine business, stymied by currency devaluation and economic woes, has “shown signs of improvement.” The company’s Argentine’s business, which account for 5% of overall sales, performed below company’s expectations last year.

Company officials were worried that the problems there could spread to the company’s other Latin American markets. Latin America represents 32% of Avon’s total sales, which reached $5.95 billion last year. Therefore, Avon announced it was realigning marketing, sourcing, distribution and other areas in “cluster” structures that focus on geographic regions with similar consumer profiles. For the most part, each country now operates independently, executives said. The “cluster” strategy was rolled out in Europe a few years ago.

Executives said that it plans to reduce new production development and marketing planning cycle time by 50% and cut back by 20% the size of its line by 2004 to improve operating margins.

Jung assured investors that the “product pipeline continues to be full,” citing innovations in skincare. The company’s Anew Biologie Skin Optimizer-plus, introduced during this year’s first quarter, sold $5 million worth of product at launch. The Anew Ultimate anti-aging cream is also doing well, she said.