Cosmetic Companies Post Prettier Profits

Avon

Faltering economy or not, women love their lipstick, with beauty biggies Avon, Revlon and Shiseido all reporting higher sales.

At Avon Products, which hiked its ad spending 19%, second-quarter revenue rose 8% to $2.7 billion, with beauty sales climbing 9% and increasing in all categories. Fragrance sales leaped 15%, color cosmetics advanced 9%, skin care grew 2% and personal care rose 1%. Total advertising spending came in at $97 million, driven primarily by increased spending in Latin America.

Net income more than doubled to $168 million, from $83 million in the year-ago period. (After adjusting for the impact of Venezuelan special items and restructuring costs, net income was $209 million, compared with $166 million in the same period a year ago.)

While results in most regions were positive, Avon faced downturns in both China and in North America, where sales fell 6% and the number of active reps dipped 4% -- a decline the company chalks up to tough comparisons with last year's record recruiting campaign. Units sold in North America dropped 6% compared with a year ago.

At Revlon, Inc., second-quarter sales gained 2% to $327.7 million, compared to $321.8 million, while net income jumped to $16.4 million, compared to $0.2 million in the same period last year. Sales gains were propelled by color cosmetics and Revlon ColorSilk, but partially offset by lower sales of Almay cosmetics and Mitchum anti-perspirant deodorant.

The company says that while the economic environment continues to be challenging, it is bullish on such new product launches as Revlon Grow Luscious mascara, Revlon Just Bitten lipstain + balm, and Almay One Coat Dial Up mascara.

And sales at Shiseido Co., Japan's biggest cosmetic company, which recently became a bigger U.S. presence through its acquisition of Bare Escentuals, gained 4.4%. (The company posted a loss, due to certain extraordinary expenses, including some related to the merger.) And while it says cosmetic sales in Japan continue to struggle, it is seeing "slight, but positive signs of recovery" in other key markets.

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