• Bloomberg, Wednesday, August 1, 2007 10:45 AM

Avon's second-quarter net income dropped 25% from a year earlier to $112.7 million--a figure lower than analysts expected due to increased marketing expenses.

Avon spent $82 million before taxes to cut jobs, shed product lines and other initiatives. Savings will be used to boost advertising by 50% this year to $375 million, following an 83% surge in 2006. Avon previously had said ad spending would rise 35% in 2007. Sales were unchanged in North America after two quarters of gains, as Avon tried to win customers from Procter & Gamble's Cover Girl and Revlon.

The number of Avon's active sales representatives--defined as those who submit orders--climbed 9%, the biggest increase in two years. Avon added $30 million in the quarter for a sales leadership program and higher incentives. The company plans to spend $100 million more on its representative program this year.

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