Revenues ‘Softer Than Expected’ at Avon

Avon Products, Inc. posted third-quarter 2010 total revenue rose 4% to $2.7 billion. Third-quarter 2010 operating profit of $260 million was flat compared with the year-ago quarter. Net income fell 7% to
$167 million.

However, beauty sales were up 3% versus the prior-year period. Active representatives grew 4%. Total units and Beauty units both rose 1%, and total price/mix rose 5%.

Andrea Jung, chairman and chief executive officer, remarked, “Third-quarter revenues were softer than we had expected, however we maintained our commitment to strategic growth investments. The third quarter was always planned to be a heavy investment quarter, although the lower-than-expected revenues added further pressure to operating margin.

“We continue to expect sales growth for the full year of at least mid-single digits in constant dollars, but now expect operating margin to be roughly flat. Importantly, we remain committed to our long-term strategic growth plan as well as the achievement of our corporate objectives, which include at least mid-single digit constant dollar revenue growth and mid-teens operating margin by 2013.”

Avon’s beauty sales growth of 3% included gains in fragrance of 8% and personal care of 5%, with color cosmetics flat and a 3% decline in skin care.