• February 6, 2008

While its fourth quarter profits fell on restructuring costs, Avon Products says its increased advertising investment is paying off, with sales of its beauty products jumping 20% in the quarter.

"This quarter's results reflect the momentum we are gaining in our turnaround plan," the company says in its release. "The 17% revenue increase -- including the 20% growth in beauty sales -- reflects the benefits of the significantly increased investment we've made in advertising over the last two years."

In the fourth quarter, the company says it spent $108 million in advertising, a 21% increase from the same period a year ago. Much of that went to support key product launches, including Anew Ultimate Age Repair Night Cream and Elixir, and the Christian LaCroix fragrances. The company also beefed up its recruitment advertising for Avon reps, and saw an 11% in the number of active reps for the fourth quarter.

For the year, Avon's total revenue gained 13%, to a record $9.9 billion, versus $8.8 billion in 2006, with sales of beauty products increasing 15%, and the number of active representatives rising 9%.

Nor does the company expect a weak economy to be much of a problem. "Our turnaround is progressing ahead of plan," it says. "We are therefore confident that in 2008 -- even in the face of macro-economic pressures in North America -- we can sustain mid-single-digit topline growth."

Its reps, however, are worried about the economy: Earlier this year, the company polled reps in 16 countries and found that worries about money are their primary concern. When asked what would change their lives for the better, "Having enough money to live right and pay the bills" came in as the overwhelming No. 1. So last month, the company hired personal finance guru Suze Orman, who fields questions from reps via the company's Intranet, as well as at company events.

--Sarah Mahoney