United Kingdom
www.avonproductsinc.com

Sales: $3.7 billion for cosmetics. Corporate sales: $5.5 billion.

This is the last year that Avon will be in our list. In May, the company agreed to be acquired by Natura via a share swap that creates the fourth largest beauty company in the world. Under the terms of the agreement, Natura will hold 76% of the combined business, which will have annual retail sales of well over $10 billion. Natura already controls 31% of the Brazilian cosmetics market; prior to the acquisition, Avon held a 16% share. Natura said the deal could result in as much as $250 million in annual savings.

The acquisition by Natura ends a painful decade for Avon, as its sales have been nearly cut in half from $10 billion in 2008 to $5.5 billion last year. These declines may be attributed to improved availability of affordable beauty products, the rise of e-commerce and an outdated marketing model. In 2015, Avon sold its North American segment due to sustained losses from its US, Canada and Puerto Rico operations. Since then, the company has been operating in Europe, the Middle East & Africa; South Latin America; North Latin America and Asia Pacific.

“As it comes to digital transformation, our approach is similar to the one Avon has been following, and we also share the same optimism about the brand,”  said Natura’s CEO João Paulo Ferreira.
Avon appointed a new chief executive officer in January. Seasoned consumer marketing executive and former CEO of Spanx, Laurie Ann Goldman succeeded Scott White.

“The right product has the power to change a woman’s life, and each woman has the power to change the world. I’m thrilled to join Avon, the company that invented social selling, and lead the team and community of beauty advisors in driving product sales and progress for women,” Goldman commented.

The Anew Hydra Fusion collection was awarded as a top eye cream by Marie Claire Magazine among “25 Best Products That Will Change Your Life.” The magazine stated that Anew Hydra Fusion De-Puffing serum instantly helps de-puff and hydrate the delicate under-eye area while reducing the appearance of bags and fine, dry lines.

On May 9, the company announced the launch of a new mobile app that will help representatives increase their productivity and manage their business easier and faster, while harnessing the power of their own networks through enhanced social sharing capabilities. Key features include latest product and promotion notifications, order placing, easy access to support features including FAQs and Avon contact centers, a sharable link to the instant messaging brochure and a social media hub.

Avon got off to rough start in 2019, as the company missed first-quarter revenue estimates, hurt by lower numbers of direct sales representatives in Europe, Middle East and Africa and South Latin America.

Sales in Europe, Middle East and Africa fell 19% to $458.7 million (£351.3 million) and 17% in South Latin America.

Losses widened to $32.7 million in the first quarter ended March 31 from $20.3 million, or 6 cents per share, a year earlier. Total revenue fell 15% to $1.19 billion and missed analysts’ average estimate of $1.24 billion, according to IBES data from Refinitiv.

United Kingdom
www.avonproductsinc.com

Sales: $4.1 billion for cosmetics. Corporate sales: $5.5 billion.

New headquarters in the UK means a new home in The International Top 30 for Avon—the 132 year-old company founded by American David H. McConnell. After striking a deal with PE Cerberus in 2015, Avon held on to its international business and left for the UK.

Sales were flat last year, but a slight decline (-2%) was offset by favorable forex. Avon blamed the dip on lower sales in Brazil, Russia and the United Kingdom, partially offset by growth in Argentina and South Africa.

By category, skin care sales rose 1% to $1.6 billion, fragrance sales increased 3% to $1.5 billion, but color sales slipped 2% to $977 million. By region, South Latin America led the way with $2.2 billion in sales; followed by Europe, Middle East & Africa ($2.1 billion); North Latin America ($811 million) and Asia Pacific ($518 million).

Sales in South Latin America rose 4% due to the favorable result of a weaker US dollar relative to the Brazilian real. Sales in Argentina, however, jumped 10%. Sales in EMEA fell 1% due to currency issues, with declines in Russia and the UK that were partially offset by growth in South Africa. Sales in North Latin America, which consists primarily of Mexico, fell 2%. The dip in sales was blamed on the earthquake which hit the country in September, 2017. Sales in Asia Pacific fell 6% due to forex and the exit from Thailand in Q1 2017 and a decline in active representatives in Malaysia.

For the first quarter of 2018, sales rose 5% to $1.4 billion. Active representatives declined 4%.

United Kingdom
www.avon.com

Sales: $4.1 billion for cosmetics, fragrances and toiletries.

Corporate sales: $5.7 billion.

2016 was a big year at Avon Products. The company separated its North American business (New Avon) and moved its commercial operations outside the US and its headquarters to London. Therefore, this time next year, look for Avon Products in Happi’s International Top 30. Company executives insist all these moves are not akin to moving deck chairs on the Titanic.

Avon Products is making progress, insists CEO Sheri McCoy, but the numbers are still falling. Corporate and beauty sales declined 7%. By category, skin care sales dropped 7% to $1.6 billion, fragrance sales declined 6% to just over $1.5 billion and sales of color cosmetics dropped 7% to $997 million. Beauty accounted for 74% of sales last year, the same as 2015.

Gains were reported in Argentina, South Africa, Russia, Mexico and Brazil, but overall sales fell in every region. Sales in Europe, Middle East and Africa declined 4% to $2.1 billion. South Latin America sales fell 7% to $2.1 billion and North Latin America sales dropped nearly 8% to about $830 million. Sales in Asia-Pacific declined more than 11% to $556 million.

Avon Products is about halfway through its three-year Transformation Plan, a scheme designed to achieve mid single-digit, constant-dollar revenue growth, and low double-digit operating margin. The plan calls for: investing in growth, reducing costs in an effort to continue to improve cost structure, and improving financial resilience.

This year, Avon is focused on investing in growth, which means media and social selling as well as spending related to service model evolution and information technology.

For the first quarter of 2017, sales rose 2% to $1.3 billion, but the number of active representatives fell 3%. Skin care sales increased 6% and fragrance sales rose 4%. Color, however, declined 2%. Overall, beauty sales were up 3% to $970 million.

On Aug. 1, James Thompson will take over as senior vice president, general counsel and chief ethics and compliance officer. He had been general counsel and secretary to Chiquita Brands International. Thompson succeeds Jeff Benjamin who is retiring.

New York, NY
212.282.5000
www.avoncompany.com

Sales: $4.5 billion for skin care, fragrances and color. Corporate sales: $6.0 billion.

Do not adjust your television, nor your magazine nor website. Yes, you are seeing two Avons in The Top 50. After years of declining sales, lawsuits and other woes, Avon’s board of directors had to do something—now the question is, should the board have done something else?

In December, Avon’s board formed a strategic partnership with Cerberus Capital Management, L.P., whereby Avon’s North America business morphed into a privately held company that is majority-owned and managed by Cerberus. Cerberus has invested $170 million for an approximate 80% ownership interest of the North America business, which now operates as New Avon LLC (for more on the New Avon, see p. 94 in this issue). Avon maintains an approximate 20% interest in the North America business.
Cerberus also invested $435 million in Avon Products, Inc. in exchange for an ownership interest of approximately 16.6%. Avon Products, Inc., comprised of the remaining international markets, continues to trade on the New York Stock Exchange under the ticker symbol AVP.

In her note to investors, Avon CEO Sheri McCoy said the board conducted an exhaustive review of strategic options, and the path taken was the best available. Observers weren’t so sure. Analysts’ reactions ranged from “Avon could have done more to extract greater value from this asset” to Avon’s board sold its assets at “fire sale” prices.

What’s done is done and really, something had to be done. Just look at fiscal 2015 results. Corporate sales fell 19% to $6.1 billion and net losses nearly tripled to $1.1 billion. Of course, when you exclude quite a few items—North America sales, the Liz Earle divestiture and “significant tax items in Brazil”— sales grew 5% in constant dollars and the adjusted operating margin for the year was 5.7%.

Avon said its beauty sales rose 3%, driven by 7% growth in fragrance and a 1% gain in color.

In another move, management has embarked on a three-year transformation plan that includes three elements: invest in growth, drive out cost and improve financial resilience.
To that, management could have added—Get the Hell Out of New York! Earlier this year, Avon announced it will transfer its headquarters to the UK. The move is part of the restructuring plan that also involves cutting 2,500 jobs out of its worldwide workforce of 28,300. The company aims to save $350 million during the next three years.

Still, all this moving and maneuvering hasn’t moved the needle yet. For the first quarter ended March 31, sales fell 16% to $1.3 billion. Net losses increased 13% to $165.4 million.

New York, NY
212.282.5000
www.avoncompany.com

Sales: $6.5 billion for cosmetics, fragrances and toiletries. Corporate sales: $8.8 billion.

It’s been another tumultuous year, but after all the headlines, false bids and SEC-implemented penalties, one of the world’s biggest names in direct selling is still, well, selling—just not as much as it has in years past. Corporate sales fell 12% in 2014, though constant revenue fell just 1%. Beauty results were a bit better, but just a bit; sales fell 12% and constant revenue was flat. More specifically, skin care and fragrance sales dropped 11% to $2.6 billion and $2.1 billion, respectively; while color cosmetic sales fell 13% to $1.5 billion.

By region, sales fell in North America and to a lesser extent in Asia; these declines were partially offset by growth in Latin America and Europe, Middle East & Africa.

Avon’s North American division’s sales fell 17% last year, and at $1.2 billion are just half of what they were in 2007. Avon blamed a decline in active representatives in North America, while gains in Latin America were the result, in part, of inflationary pricing in Venezuela. Elsewhere, growth in South Africa and the UK lifted results in Europe, Middle East and Africa. Revenues fell in Asia, despite gains in the Philippines. Overall, more than 85% of Avon’s revenues come from outside the US, which is why many observers have urged company executives to exit the US in favor of faster growing emerging markets that may be better served by the direct sales model.

CEO Sheri McCoy admitted times are tough at Avon, but she assured investors that the company’s top 12 markets are stabilized and well positioned to continue to progress toward sustainable, profitable growth. But in order to achieve that, Avon has to solve the tricky issue of keeping and growing its active representative base while improving the online experience for consumers—without alienating representatives; sort of like a dog chasing its tail, it just goes round and round. One good outcome from 2014 is that Avon finally put its legal woes to rest. The company agreed to pay $135 million in fines related to a bribery scandal in China, but only after spending $300 million in legal fees.

The new year didn’t start off with good news. For the first quarter of 2015, corporate sales fell 18% to $1.7 billion—but the company was quick to note that at constant exchange rates, revenue actually rose 1%. Beauty sales declined 17% to just under $1.3 billion, as all three units reported declines. Skin care sales fell 17% to $532 million; fragrance sales dropped 18% to $423 million and color cosmetics sales fell 16% to $336 million. Sales in Latin America fell 22% to $836 million; sales in Europe, Middle East and Africa fell 16% to $550 million; North American sales fell 18% to $242 million; and sales in Asia-Pacific fell 1% to $164 million.

New York, NY
212.282.5000
www.avoncompany.com

Sales: $7.2 billion for cosmetics, fragrances and toiletries. Corporate sales: $9.9 billion. Net loss: $56 million.

Net losses rose more than 30% and corporate sales fell 6% last year as the company for women continued to lose women representatives. So much so, that Avon changed its performance metric from “Growth in Active Representatives” to “Change in Active Representatives.”

Overall, beauty product sales dropped 7%, due to a 12% decline in skin care product sales. Personal care sales fell 7%, color dropped 6% and fragrance sales declined 4%. By region, sales in Latin America fell 3% to $4.8 billion; Europe, Africa and Middle East revenues fell 1% to nearly $2.9 billion; sales in North America dipped 1% to $1.4 billion and Asia-Pacific sales plunged 16% to about $758 million, due to a 48% sales decline in China.

The bad results have continued in 2014, as first quarter total revenue dropped 11% to $2.2 billion. Beauty sales fell 12% to about $1.5 billion, led by a 14% decline in skin care sales to $645 million, a 9% decline in fragrance sales to $513 million and a 12% decline in color cosmetics sales to $401 million. By region, sales in Latin America fell 7% to $1 billion; sales in Europe, Middle East & Africa dropped 11% to nearly $655 million; North American sales plunged 22% to less than $296 million and sales in Asia Pacific dropped 17% to $166 million.

In April, the company agreed to pay $135 million to settle bribery charges that had appeared in 2008, when Avon reportedly bribed Chinese government officials to gain favors. Avon paid $68 million the US Justice Department and $67 million to the Securities and Exchange Commission.

In May, as Avon’s woes mounted, reports surfaced that the board could consider a sale. With Avon cozying up to Coty to sell some of Coty’s fragrances in Brazil, observers say Coty is one suitor. Another is Tupperware, according to sources. The company’s stock price has fallen from a 52-week high of nearly $25 a share to less than $15 a share in mid-June.

New York, NY
212.282.5000
www.avoncompany.com

Sales: $7.7 billion for cosmetics, fragrances and toiletries. Corporate sales: $10.7 billion. Net loss: $42 million.

It’s been more than a year since Sheri McCoy took over at beleaguered Avon, but company executives insist things are starting to get back on track.

“Our first-quarter results reflect continued signs of stabilization, including early progress in our cost reduction efforts,” said McCoy, chief executive officer. “I’m pleased with the performance of our Latin America and Europe, Middle East and Africa regions, particularly in Brazil and Russia. The teams there are focused on ensuring that this performance is sustainable. As for our other markets, there remains work to be done, particularly in the US.”

Wishful thinking maybe, as the first quarter of 2013 wasn’t exactly kind to the company.

Corporate sales fell 4% to $2.5 billion. Avon Beauty’s sales declined 5%. Fragrance sales increased 1%, but personal care (-3%), color (-6%) and skin care (-12%) sales were down.

Those results follow a year in which sales fell 5% and the company posted a net loss after reporting more than $500 million in profit in 2011. Sales were down in all regions. Latin America sales dropped 3% to just under $5 billion. A weak US dollar was blamed for a 12% decline in Brazil, but the company reported a slight gain in Mexico.

Sales in Europe, Middle East and Africa fell more than 6% to about $2.9 billion. Last year, Avon lumped the results of Central and Eastern Europe and Western Europe, Middle East and Africa together for the first time. Sales were off due to exchange rates, and declines in the UK and Turkey, which were partially offset by gains in South Africa.

Sales in Asia Pacific fell about 4% to $902 million, due to unfavorable results in China, where tough laws force Avon to forego its representative model in favor of traditional retail channels.

But the big problems for Avon reside in its home region. Last year, North American sales fell 7.6% and the company reported nearly $215 million in operating losses. What’s worse, the number of representatives has declined as the impact from The Great Recession waned and Avon’s internal troubles came to light.   According to industry analysts, in 2007-08, total sales representatives grew by 7% year-on-year as people reached out for supplementary sources of income. As a result, Avon posted an 8% gain in revenues for 2008. The number of representatives rose from 6.2 million in 2009 to 6.5 million in 2010 that resulted in an increase in revenues from $10.2 billion to $10.8 billion during the same period. However, the number declined to 6.3 million in 2012, resulting in lower overall revenue. To help turn around North American operations, Pablo Munoz was appointed senior vice president and president, North America. He joins Avon from Tupperware Brands Corporation, where he has worked since 1993, most recently as group president of the Americas region.

To get growing again throughout the world, Avon is focused on three issues:

• Innovate the consumer proposition;
• Transform the representative experience; and
• Optimize geographies.

More specifically, Avon executives are sharpening consumer insights and parlaying that knowledge into creating and executing focused category strategies in color, fragrance, skin care and fashion and home. To boost the sales rep’s experience and income potential, Avon will rely on more technology tools and well as restore the associates’ pride in Avon, according to McCoy.

Finally, the company is committed to shoring up weak national markets and existing ones that no longer make sense. But, as more than 70% of company sales come from emerging markets, Avon executives insist the company is well positioned to grow as global purchasing power shifts East and South.

In April, the company said it was eliminating more than 400 jobs and restructuring or abandoning underperforming businesses in Africa, the Middle East and Europe.

The cuts, which represent about 1% of Avon’s work force, are part of the company’s plan to save $400 million by 2016. The 400 terminations are on top of the elimination of 1,500 jobs that the company announced in December when Avon said it would exit South Korea and Vietnam.

During the past year, a wounded Avon was being circled by Coty Inc. But in May 2012, Coty dropped its $10.7 billion offer in order to focus on its own IPO.

5. Avon Products

New York, NY
212.282.5000
www.avoncompany.com
Sales: $8.2 billion for cosmetics, toiletries and fragrances.
Corporate sales: $11.2 billion. Net income: $513 million.

Avon’s been in the news of late…much to company executives’ chagrin. Last year there was the bribery scandal in emerging markets. Next came the semi-forced resignation of CEO Andrea Jung. Most recently, there was Coty’s unsolicited bid for the company that went nowhere. To make matters worse, through all that Avon has been reporting less than stellar results.

The good news, of course, is that after a well-published search, Avon selected Sheri S. McCoy as its chief executive officer (Jung remains on the board as executive chairman). McCoy joined Avon after a 30-year career at Johnson & Johnson, most recently serving as vice chairman of the executive committee, responsible for the pharmaceutical and consumer business segments that represented more than 60% of the company’s revenues. McCoy received a B.S. degree in textile chemistry from the University of Massachusetts, Dartmouth. She also earned a master’s degree in chemical engineering from Princeton University and an MBA from Rutgers University. She holds four US patents. In 2011, McCoy ranked No. 10 on Fortune magazine’s “50 Most Powerful Women in Business” list, which she has been on since 2008.

Avon’s Glimmer Sticks eyeliners added on new hues this season.

McCoy may be powerful but she’ll need superhuman strength to give Avon a lift. Since 2007, the company’s stock has underperformed its peers, and Avon’s performance in North America has been underwhelming. First and foremost, however, McCoy will have to provide a lift to all those Avon Ladies. According to sources, the reps want improved commissions, a break on what they pay for brochures, more exciting products and less pressure to recruit more reps.

Last year, Avon’s sales rose 4%, primarily due to a favorable foreign exchange rate. The number of active representatives fell 1% to 6.4 million. Beauty product sales, which accounted for 73% of corporate revenue last year, rose 5%, although unit sales declined 1%. The company blamed slower-than-expected growth due to weaker macro-economic conditions. Still, all beauty segments reported an increase in dollar sales. Fragrance increased 7%, color cosmetics increased 5%, personal care rose 4% and skin care increased 3%.

By region, sales in North America fell 6% to $2.1 billion. Unit sales declined 10% and the number of active representatives declined 8% to about 420,000. Avon blamed the drop in sales on a declining number of active representatives, as well as weakness in the beauty market. That’s hard to believe, though, since nearly every research firm reported that beauty made a big comeback in the US in 2011.

In contrast, Latin America sales rose 11% to $5.1 billion, while unit sales increased 2% and the number of representatives rose 3%. Sales in Mexico improved 17% and sales in Brazil rose 6%.
Sales in Central and Eastern Europe were flat at nearly $1.6 billion. Units and active representatives declined 6% and 2%, respectively. Weakness in Russia was offset by a favorable exchange rate.

Western Europe, Middle East and Africa reported a 5% gain in sales to $1.5 billion. Unit sales increased 1%, while the number of active representatives rose 4%—which is why Avon’s sales rose in the region, according to the company. Furthermore, big gains in South Africa were partly offset by declines in the UK.

Sales in Asia Pacific fell 4% to $942 million. Last year, the results of Asia Pacific and China were managed as a single operating segment. Unfortunately, revenue in China fell 20% last year, but the company is focused on improving representative productivity.

For the first quarter of 2012, corporate sales fell 2% to $2.6 billion. Beauty sales declined 1%: color was flat, fragrance and skin care declined 1%, and personal care was down 2%.

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.

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.

New York, NY
212.282.5000
www.AvonCompany.com
Sales: $6.9 billion

Sales:

$6.9 billion for cosmetics, toiletries and fragrances. Corporate sales: $9.9 billion. Net income: $531 million.

This past year marked a turning point for Avon, with a new tagline, “Hello Tomorrow,” as well as the final phase of the company’s turnaround plan. Beauty revenue increased 15% in 2007, and according to Avon, its growth rate has more than doubled over the past two years. Personal care sales rose 21%, while skin care increased 6% with new anti-aging breakthroughs in the Anew line.

With the rebranding and relaunch of its flagship Avon Color line, the company reported 16% growth in the color cosmetics category. In fragrance, the launches of Rouge and Noir by Paris designer Christian Lacroix contributed to 20% growth in this category.

By region, North America—which consists largely of the U.S. business—recorded a 3% increase in total revenue to $2.6 billion for 2007. The gain was attributed to growth in active representatives and recruiting advertising.

Revenue for Latin America jumped 20% in 2007 to $3.3 billion. According to the company, the increase benefited from progress in most markets, particularly from growth of approximately 30% in Brazil, Colombia and Venezuela. Revenue in Mexico was flat for the year.

In Western Europe, the Middle East and Africa, total revenue increased 16% to $1.3 billion. The rise was attributed to growth in Turkey and the UK—revenue growth for Turkey was over 35%, while the UK saw a boost of 10% in revenue.

Sales in Central and Eastern Europe rose 19% to $1.6 billion, with growth mainly attributed to Russia—20%, to be exact. Asia Pacific reported an increase of 5% to $850.8 million, with a 30% boost from the Philippines. Declines in Japan and Taiwan offset the total.

Hello Tomorrow

In 2007, Avon launched a global integrated marketing campaign called “Hello Tomorrow,” supporting both the brand and the direct-selling channel. As part of “Hello Tomorrow,” the company signed actress Reese Witherspoon to a multi-year contract as Avon’s first-ever global ambassador.

Ms. Witherspoon now serves as the honorary chairman of the Avon Foundation, as well as the spokeswoman for Avon’s beauty brands and sales representatives. As part of this multi-year agreement, Ms. Witherspoon is also involved in product development initiatives, and appears globally in Avon advertising, websites and in the company’s brochures.

The company also has partnered with personal finance expert Suze Orman as a special personal finance advisor to the Avon representatives to offer money management advice and strategies for success. A first of its kind in the direct selling industry, the program will involve nearly 500,000 Avon representatives in the U.S., with plans to expand globally in the future.

Mark—Avon’s brand for the younger set—also tapped a new face for 2007, Lauren Conrad, star of the MTV show “The Hills.” Ms. Conrad (better known as LC) appears in the brand’s “magalog”  (a combination magazine and catalog) and is involved in both beauty and fashion initiatives for Mark.

Avon plans to launch an exclusive collaboration with the Finnish textile and clothing design company Marimekko in a color collection that will debut in the U.S., Europe, Mexico and Asia in the fourth quarter of 2008. The company also recently revealed the news of its collaboration with the James Bond entertainment franchise to create a new signature Bond Girl 007 women’s fragrance for fall 2008. British actress Gemma Arterton, who plays the role of Agent Fields in the upcoming Bond film, will be the face of the new fragrance.

Distribution News

This past year, Avon revealed plans to restructure its U.S. distribution operations to enhance service to its representatives, improve operating efficiencies through new technologies and achieve other cost savings that can be reinvested in business growth.

The initiative, which is part of the company’s previously announced multi-year turnaround plan, includes the building of a “state-of-the-art” distribution center in Zanesville, OH that will open in 2009. The facility site is approximately 50 miles east of Columbus, OH. It will employ in the range of 500 people when fully operational and will have capacity to ship 50% of U.S. sales volume.

Avon also said that it will phase out its current distribution branches in Newark, DE, and Glenview, IL, with the closures expected to be completed by mid-2009 and mid-2010, respectively, with a combined loss of approximately 620 positions.

Avon said that it expects to invest approximately $150 million in capital expenditures relating to the new distribution center and for technology and equipment upgrades in other branches. The company plans to upgrade and modernize its Atlanta-based distribution center, and is evaluating options for investing in a new warehouse management system for the Pasadena site.

In Western Europe, Avon plans to reconfigure the manufacturing facility in Neufahrn, Germany, leading to reduced positions. Additionally, the company said that it will consolidate some distribution operations in Continental Europe to its distribution center in Alcala de Henares, Spain. In line with this, Avon said that it would phase out its current distribution branch in Neufahrn by early 2009.

In Latin America, Avon said that it plans to build a new distribution center in Brazil to meet increasing demand in that key growth market. The company said that it is evaluating potential locations for the facility, and expects to announce a decision in 2008. The new distribution center will feature advanced order-picking technology to improve productivity and order accuracy, along with automated systems that will streamline work flows, resulting in cost efficiencies and improved service to representatives.

Avon said that it expects the new Brazilian facility to open in 2010. When fully operational, it will employ approximately 1,300 and have capacity to ship 70% of Brazil’s overall unit volume. In line with this, the company said that it plans to phase-out its current distribution site in Sao Paulo, Brazil during 2011. Approximately 1,700 people are currently employed at that facility.

Also in Latin America, Avon announced plans to close its manufacturing facility in Guatemala in late 2008 and transfer production to its existing plant in Celaya, Mexico. The company said that it will continue to operate its distribution facility in Guatemala.

Final Stages of Restructuring

In 2007, Avon announced the final initiatives of its restructuring program under its turnaround plan that commenced in late 2005. The company now expects to achieve annualized savings of approximately $430 million once all initiatives are fully implemented by 2011-2012, compared to the original objective of $300 million. These savings are projected to reach $300 million in 2009. The company now anticipates total costs to implement the restructuring initiatives to be approximately $530 million instead of $500 million, of which the company will have recorded approximately $460 million through the fourth quarter of 2007 and the remainder by the end of 2009.

According to Avon, as a result of the initiatives, approximately 4,000 positions would be impacted globally, with a net reduction totaling approximately 2,400 positions when the initiatives are fully implemented.

For the first quarter of 2008, corporate sales rose 14% to $2.5 billion. Sales of beauty products jumped 17% and included increases in all categories: fragrance grew 20%, color was up 15%, personal care rose 15% and skin care increased 13%, according to Avon. Net income in the first quarter of 2008 was $185 million.