Sticking to women's products and direct sales, Avon remains one of the fastest growing leading companies in beauty industry. Instead of looking for growth in the fast expanding male grooming market like many of its competitors, Avon focuses only on women retaining the slogan "the company for women". And, instead of distributing in department stores, Avon has increased the number of its independent sales representatives.
Avon reported recently 13 per cent sales growth in the first half of this year, reaching $1.6 billion, and a 16 per cent rise in operating profit -up to $325.5 million. The sales results were driven by a 17 per cent increase in cosmetics sales, which account for about two thirds of all sales.
The company is the world's largest direct seller of beauty products. Avon markets to women in over 100 countries through 4.4 million independent sales representatives - an increase of 11 per cent compared to 2003.
Avon recently announced it had received a verbal permission and was waiting for a written one from the Chinese government to sell directly to consumers in the land of the rising sun. The company expects to increase its sales in China from $157 million last year to $400 million by 2007. Door-to-door selling has been forbidden in China since 1998 and it is expected to be lifted soon in accordance with the World Trade Organization requirements.
ACNielsen, in a recent report about personal care, identified increased interest in grooming among the male population as well as the introduction and wider distribution of premium products, as two of the six key trends that drive sales in the industry.
Looking for higher growth, many leading cosmetics companies are using mass retail outlets, which they had previously spurned, as their distribution channels. Estée Lauder for example recently announced plans to sell a number of its premium cosmetic products through discount retailer Kohl's.
Another example is Elizabeth Arden, which recently partnered with Wal-Mart recently for a skin care line.
"Prestige products are not only increasingly being sold in mass retail, but continue to take market share from mass brands at mass retailers," said E. Scott Beattie, chairman and CEO of Elizabeth Arden.
Avon, on the other hand, has just started on its biggest advertising campaign ever, focusing solely on women and direct sales. The $100 million campaign featuring the new global spokeswoman Salma Hayek is also expected to have a substantial beneficial effect on lifting sales in the second half. The actress is already promoting My Lip Miracle lipstick on TV and in print. This month Avon will relaunch its Anew anti-aging skin care line.
"We're pleased with the continuing strength of our business fundamentals, and we're confident that 2004 will be our fifth consecutive year of exceptional operating performance," said Andrea Jung, Avon's chairman and CEO.