Beauty Sales Lift Avon’s Earnings 35%

Avon Products Inc.’s earnings rose 35% in the fourth quarter, fueled by a dramatic gain in beauty sales, continued strong performance in international operations and favorable foreign exchange rates, executives said.

Direct-seller Avon earned $261.3 million in the three-month period ended Dec. 31, compared to $193 million in the year-ago period. Revenues increased 14% to $2.11 billion in the fourth quarter from $1.85 billion in the year-ago period.

Excluding the impact of foreign exchange, sales increased 9%. Beauty sales advanced 18% on the strength of Anew Clinical Wrinkle and Line Corrector products and the global launch of the fragrance Treselle, which drove mid-teen sales growth in fragrance.

In the U.S., sales in the quarter were hurt by low demand for certain holiday non-beauty products and a decline in fragrance sales, as expected. Sales rose 2%, with 5% growth in beauty products, fueled by gains in skin care and color cosmetics. The number of active representatives increased 3% and the number of products rose 1%. Mark., the company’s new brand for young women, contributed more than 1% to overall U.S. sales growth in the quarter.

The European region posted another strong quarter, with sales rising 30%. The number of active representatives rose 14% and the number of products sold gained 9%. In Latin America, sales increased 16%. Sales in local currencies were up 12%, and active representatives rose 8%. Sales in the Pacific region increased 17%, with China, Taiwan and Australia driving the gain. Active representatives increased 12%.

Avon said it continues to expect earnings growth of 10-12% in 2004. For the year, profits were $664.8 million, compared with $534.6 million a year ago. Revenues jumped to $6.88 billion, compared with $6.23 billion in the year-ago period.