Avon’s Earnings Up 11% in 2Q

Avon Products, Inc., New York, announced a second quarter earnings increase of 11% from last year’s second quarter and ahead of the guidance of mid-single-digit earnings growth provided by the company in June.

Avon’s sales in the second quarter increased 8% to $1.64 billion, versus $1.51 billion in the year-ago period. Avon estimates that the impact of SARS, mainly in China and Taiwan, reduced second quarter consolidated sales growth by approximately 1%. The company expects no significant SARS impact for the balance of the year. Avon said sales in the quarter were driven by a 14% increase in sales of beauty products and a 14% gain in the number of active representatives. Units were up 2% in the quarter versus a year ago.

Net income increased 11% to $171.5 million in the quarter, compared with $155.0 million in the second quarter of 2002.

Andrea Jung, chairman and chief executive officer said, “This was another quarter of robust top-line growth and significant margin expansion, further demonstrating the strength of our direct selling channel and the effectiveness of our strategies. Our international operations, as expected, drove results in the quarter, with sales up 12% and operating profits up 20%. In the U.S., sales growth accelerated to 3% and profits were flat with prior year, also in line with our expectations, as we invested to support the expansion of the leadership program as well as the May launch of a blockbuster new skin care product, Cellu-Sculpt, and the ramp-up for the August launch of our new Mark brand for young women.”

On the full-year outlook, Ms. Jung said, “2003 is shaping up as our fourth consecutive year of meeting or exceeding our financial targets.”