Increased ad spend helps boosts Avon's fourth quarter

By Simon Pitman

- Last updated on GMT

Related tags: Cent, Revenue

Avon's turn around is starting to happen, after the company
reported a 9 per cent boost in sales for the fourth quarter on the
back of strong fragrance and color sales.

Fourth quarter sales reached $2.6bn, while full year revenue was up 8 per cent to reach $8.8bn, figures that were largely ahead of analysts' expectations.

The company said that on a regional basis strong performances in the booming economies of China and Latin America had also helped to drive sales.

Fourth quarter net earnings were largely unchanged with last year, coming in at $184.1m, compared with $183.2m in the year-ago period. The company said that this figure was significantly impacted by $44m in costs for the current restructuring phase.

For the full year net earnings were down 44 per cent, from $847.6m in 2005, to $477.6m for the current, a figure that was again attributed to the company's comprehensive restructuring program.

""With 9 per cent revenue growth in the fourth quarter, we continue to feel good about the progress we are making against our turnaround plan,"​ said Andrea Jung, chairman and CEO. "The investments we are making in our business are clearly starting to deliver results."

In the all-important North American market, the company reported a jump in fourth quarter sales of 4 per cent to reach $749.9m, with higher beauty sales growth of 2 per cent, representing the first time in eight consecutive quarters that the figure was positive.

The company also said that positive responses to increased representatives as well as a reduction in fuel prices had helped to boost the bottom line.

In Latin America sales grew 13 per cent to reach $770.2m, boosted by the on-going strength of the Brazilian market, pushing top-line growth at 30 per cent for the full year to exceed the $1bn mark. Meanwhile sales growth in the fourth quarter came in at 50 per cent in Colombia, offsetting a drop of 9 per cent in the Mexican market.

Results from Eastern Europe, Middle East and Africa were up 10 per in the quarter, to reach $355.9m, underscored by a strong performance in the UK and Turkish markets. In Central and Eastern Europe, Russia was the main driving force behind a 17 per cent jump in sales for the quarter, to reach $456.6m.

In Asia, the Asia Pacific region saw sales slump 2 per cent to reach $222.6m, a figure that was counteracted by a far stronger performance in the China market where sales grew 28 per cent to reach $67.2m.

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