09.18.00
Avon Products announced it will sell a new line of products, starting mid-2001, that will be on the shelves at cosmetic counters at J.C. Penney and Sears, Roebuck and Co. The goal, in part, is to attract customers who may feel that the idea of having one of its three million independent Avon ladies come calling is archaic. The $5.3 billion company, which announced the venture Monday, said it wasn't retiring the Avon lady, and emphasized that direct sales will continue to represent its core business, accounting for about 95% of overall sales. Previously, direct sales accounted for about 98 percent, according to Victor Beaudet, vice president of media relations. In fact, Mr. Beaudet pointed out that Avon is investing about $100 million in Avon's core business, including advertising, revamping its website, and developing what it calls its Avon Beauty Advisory Circle, which offers beauty certification to its sales representatives.
The separate line of products, tentatively called Avon Gold, will cost 30 to 50% more than Avon's traditional lineup, which include skin care creams and makeup. Amanda Tepper, an analyst at Chase H&Q, estimated that the venture could add another $300 million to $400 million in sales, within the next couple of years. She added that Sears and J.C. Penney both have had weak cosmetics businesses, and a new label could help drive traffic. Avon declined to comment on sales projections.
The separate line of products, tentatively called Avon Gold, will cost 30 to 50% more than Avon's traditional lineup, which include skin care creams and makeup. Amanda Tepper, an analyst at Chase H&Q, estimated that the venture could add another $300 million to $400 million in sales, within the next couple of years. She added that Sears and J.C. Penney both have had weak cosmetics businesses, and a new label could help drive traffic. Avon declined to comment on sales projections.