Avon Reports First-Quarter Sales Up, Thanks To 80% Ad Spend Hike

Thanks to an 80% increase in ad spending, Avon Products Inc. says first-quarter sales of its beauty products are up 10%, its third consecutive quarter of double digit growth. And net profit tripled to $150 million.

Avon said that in the first quarter, it increased its ad spending to $71 million to fund the launch of "Hello Tomorrow," the company's first global brand campaign. Those ads, from WPP Group's Soho Square, broke in March. In addition, it spent heavily on key product introductions, including Anew Alternative Intensive Eye Cream and Avon Color Ultra Color Rich Lipstick.

Revenue rose 9%, to $2.19 billion. Sales of personal-care products jumped 17%, fragrance rose 12%, and color cosmetics increased 9%. Sales of skin care products gained 6%.

The company, which sells direct to consumers through its five million representatives, also says the number of active representatives rose 4% in the quarter, and that it spent $15 million on increased incentives for representatives.

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All six of its geographic regions registered gains. Whiles North American sales were up just 3%, sales in Western Europe, the Middle East and Africa grew 17% (9% in local currency), with Turkey and the U.K. among the brightest spots. In Central and Eastern Europe, revenue also rose 17% (9% in local currency), with sales up 30% in Russia. And despite a relatively flat performance in Japan, in China, where Avon has 168,000 active reps, revenue grew 44% (39% in local currency.)

Meanwhile, the company is continuing its effort to create more up-market offerings, and last week, said it would partner with designer Christian Lacroix to create two fragrances. A women's scent, Christian Lacroix Rouge, will launch this fall. And Noir for men is expected in February. The company has previously announced a partnership for a line of color cosmetics with designer Cynthia Rowley. The first Cynthia Rowley Color Collection is also set to debut this fall.

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