Sales: $7.4 billion
$7.4 billion for cosmetics, toiletries and fragrances. Corporate sales: $10.3 billion. Net income: $625 million
Andrea Jung, chairman and chief executive officer; Charles Cramb, vice chairman, chief finance and strategy officer; Lucien Alziari, senior vice president, human resources and corporate responsibility; 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 and Central and Eastern Europe; John Higson, senior vice president, global direct selling and business innovation; John F. Owen, senior vice president, global supply chain; Kim Rucker, senior vice president and general counsel; Mike Schwarz, senior vice president, global insights and marketing intelligence
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
Avon—Anew Reversalist, Carlos Falchi color collection, U By Ungaro color collection, reformulated and re-released Glazewear lipgloss line, MagiX Cashmere Finish Foundation; Outspoken fragrance. Mark—Blame It on Rio color collection
New Avon Glazewear lipgloss for Summer 2010
Corporate sales fell 3% last year. Beauty accounted for 72% of sales, followed by fashion (17%) and home (11%).
In 2009, beauty sales also fell 3%, with decreases in all sub-categories except color cosmetics. Within the beauty category, skin care declined 8%, fragrance declined 2%, personal care declined 1%, but color cosmetics increased 3%.
By region, sales in Latin America rose 6% to $4.1 billion, driven by a 9% gain in Brazil that was partially offset by an 11% decline in Mexico. Sales in North America fell 9% to $2.2 billion, due to the recession. Moreover, a lower average order received from representatives more than offset an increase in active representatives. Sales of beauty products declined 6% in 2009. Central and Eastern Europe reported a 13% decline in sales to $1.5 billion. Sales in Russia and Ukraine fell 7% and 19%, respectively. Sales in Western Europe, Middle East and Africa declined 5% to $1.2 billion. Growth in active representatives was offset by a lower average order reflecting continued recessionary pressure, according to Avon. Active representatives growth for 2009 benefited by one point due to the acquisition of a small distributor in Saudi Arabia during the second quarter of 2009. UK sales fell 16%, but rose 2% in Turkey. Sales in Asia Pacific fell 1% to $885 million, as sales in Japan fell 2%. Finally, sales in China rose 1% to $353 million, but the company warned that results may be skewed as the country evolves toward a traditional direct selling model. For example, revenue from beauty boutiques fell more than 40% last year, while revenue growth from direct selling increased 24%.
While she acknowledged 2009 was a difficult year, chairman and chief executive officer Andrea Jung noted that sales gained momentum in the fourth quarter, as sales rose 13% and she expected to realize further benefits and savings from Avon’s product line simplification, strategic sourcing and restructuring initiatives.
Jung proved prescient as corporate sales surged 14% to $2.5 billion in the first quarter of 2010. Beauty sales were up 14% versus the prior-year period, as the number of active representatives grew 6%, with growth in all regions except China. Units and price/mix each rose 4% and beauty units increased 3%. Beauty sales growth included gains in all categories: fragrance, color cosmetics, personal care and skin care grew 21%, 23%, 11% and 1%, respectively.
“We are pleased with the continued top-line momentum across most of our regions in the quarter, supported by our continuing investments in advertising and representative value proposition,” explained Jung. “This is the second quarter in a row where Latin America and our two European segments, which comprise approximately 70% of our sales, grew constant-dollar sales at a rate of 15%.”
In March, Avon acquired Liz Earle Beauty Co. Limited, a fast-growing, privately-held UK brand of naturally active skin care products sold primarily through direct-to-consumer channels. According to Avon, the brand will broaden Avon’s leadership position in anti-aging skin care with Liz Earle’s expertise in botanical ingredients and natural positioning.
Two Million Trees and CountingSouth Americans can breath a little easier these days, thanks to Avon’s recent announcement that it will plant two million trees to restore the Atlantic Rainforest in South America.
The planting is part of the company’s Hello Green Tomorrow Campaign, announced in mid-March, designed to unleash the power of its woman-to-woman network of 6.2 million Avon representatives and 300 million customers in a global women’s environmental movement to nurture nature. In just 80 days, the group was able to virtually double the company’s initial pledge of $1 million dollars, with every dollar going to the planting and restoration of one tree. Sixty countries, ranging from Japan to Mexico to Russia are participating in the Hello Green Tomorrow campaign.
“The two million trees we are planting represent the initial milestone in what will be an ongoing global environmental mobilization effort,” said Jung. “In addition to raising funds to plant and restore trees, we are also leveraging our powerful woman-to-woman network to drive ‘green’ educational information on the five simple things each and every one of us can do to improve our environment.”
All trees planted in the Atlantic Rainforest through Hello Green Tomorrow will support the United Nations Environment Programme (UNEP) Plant for the Planet: Billion Tree Campaign. The trees will be planted and the restored forest monitored by The Nature Conservancy, Avon’s partner in the program.