New York, NY
212.282.5000
www.avoncompany.com
Sales: $7.6 billion

Sales: $7.6 billion for cosmetics, toiletries and fragrances. Corporate sales: $10.6 million. Net income: $875 million.

Key Personnel: Andrea Jung, chairman and chief executive officer; Elizabeth A. Smith, president; Charles Cramb, vice chairman and chief finance and strategy officer; Lucien Alziari, senior vice president, human resources; Geralyn R. Breig, senior vice president and president, North America; Jeri B. Finard, senior vice president, global brand president; Bennett R. Gallina, senior vice president, Asia Pacific, China, Western Europe, the Middle East and Africa; Nancy Glaser, senior vice president, global communications; Donagh Herlihy, senior vice president, chief information officer; Charles M. Herington, executive vice president, Latin America; John Higson, senior vice president, Central and Eastern Europe; Srdjan Mijuskovic, senior vice president, global sales; John F. Owen, senior vice president, global supply chain; Kim Rucker, senior vice president and general counsel; James Wei, senior vice president, special projects.

Major Products: Color cosmetics—Avon Color and Beyond Color; Skin care—Anew; Bath and body—Naturals and Skin-So-Soft; Hair care—Advance Techniques; Avon Wellness; Fragrances; Mark.

New Products: SpectraColor lipstick, Anew Clinical Derma-Full X3 Facial Filling Serum, Unscripted, U, Avon Bond Girl 007 and Spotlight fragrances. Ultra Color Rich 24K Lipstick.

Comments: Corporate sales rose 8% last year to a record $10.7 billion. More importantly, for Happi readers, sales of beauty care products jumped 10%. Beauty represented 72% of sales in 2008, up from 70% in 2007.

By beauty category, sales of color cosmetics led the way, rising 11%, an increase helped along by the popularity of Reese Witherspoon, Avon’s global ambassador.

Skin care sales grew 10% on the strength of Anew, which posted a 20% increase in sales to $900 million.

Meanwhile, fragrance sales increased 9% powered by celebrity and designer alliances, including Unscripted by Patrick Dempsey, and U by Ungaro and U Bond Girl 007. Finally, personal care sales were up 8%.

By region, sales in Latin America rose 18% to nearly $3.9 billion. Operating profit jumped 43% to $690 million. Units sold was up 4% and the number of active representatives increased 6%. The good news was driven by larger average order and the growth of active representatives. Leading the way was Brazil, which posted a 24% gain and Venezula, where sales increased 36%.

However, sales in North America fell 5% to approximately $2.5 billion, due to deteriorating consumer confidence and higher fuel prices. Operating profit was flat at about $214 million, units sold fell 4%, while the number of active representatives rose 2%.

Avon tapped the hair care segment this year with a selection of anti-frizz products, like these capsules.

Growing interest in the Avon opportunity helped sales rise 9% to $1.7 billion in Central and Eastern Europe, as the company began distributing product brochures more frequently throughout the region. Units sold increased 2%, but the number of active representatives jumped 12%. Sales in Russia rose 8% and more than 20% in the Ukraine.

Sales in Western Europe, Middle East and Africa increased 3% to $1.35 billion. Operating profit was $121 million. Units sold fell 3%, but the number of active representatives rose 4%. Revenue growth was strongest in Italy and Turkey, offset by a 3% decline in the UK.

Sales in Asia Pacific rose 5% to $891 million, operating profit was up 59% to $102 million and the number of active representatives rose 4%. Unit volume was flat. The Philippines posted a 20% gain, but sales in Japan were flat and sales in Taiwan declined.

Sales in China jumped 25% to $351 million and operating profit reached $17.7 million, thanks to a 79% increase in the number of active representatives and a 2% increase in units. The boost in the sales force came after increased recruiting, advertising and field incentives.

While executives at other companies may fret about the impact unemployment may have on their business model, Avon embraces it. The company notes that as unemployment grows, so too does interest in Avon’s business model. In fact, Avon calls itself the largest engine of economic opportunity for women on earth. To promote the Avon advantage, the company is doubling the amount it spends to promote the Avon earnings opportunity, and it spent a fair share of it on a 30-second spot during the Super Bowl.

Still, Avon’s corporate sales tumbled 13% in the first quarter of 2009, due to foreign currency pressure. For example, beauty sales in the first quarter of 2009 were 12% lower versus the prior-year period, but increased 5% on a local-currency basis. Beauty units increased 2%, and units overall were flat with the prior-year quarter. Active representatives grew 7%.

Anew Clinical Crow’s Feet Corrector.

“We plan to leverage the inherent advantages of our direct selling business model during this time of uncertainty. We are offering consumers an increased assortment of ‘smart value’ products—great quality products at affordable price points—which contributed to beauty unit growth of 2% in the quarter,” explained Ms. Jung. “We are also aggressively promoting our representative earnings opportunity to a wider audience. The early strength of this new recruiting effort reflects the growing relevance of the Avon earnings opportunity.”

On a category basis, color cosmetics, fragrance, personal care and skin care sales fell 9%, 10%, 9% and 17%, respectively.