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Avon's Q4 Profits Drop as Sales Grow

Annual sales near $10 billion following 17.4 percent pickup in final quarter.

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The first chapter of Avon Products Inc.’s ongoing turnaround plan delivered a dramatic ending, with the direct seller reporting a 17 percent surge in fourth-quarter revenues.

The two-year stretch — marked by a restructuring plan implemented in 2005 and an effort to trim the product line — will be followed by chapter two, which chairman and chief executive officer Andrea Jung said will focus on sustaining top-line growth and fortifying Avon’s global brand equity.

However, the costs tied to the turnaround effort — including increased advertising — hampered net earnings for the fourth quarter ended Dec. 31.

Profits declined by 30 percent to $128.9 million, or 30 cents a diluted share, from $184.1 million, or 41 cents, in the year-earlier period. Stepped-up advertising levels, however, boosted revenue by 17.4 percent to $3.08 billion from $2.62 billion in the prior year.

For the year, net income rose 11.1 percent to $530.7 million, or $1.21 a diluted share, from $477.6 million, or $1.06 a year earlier, on revenue that climbed 13.5 percent to $9.94 billion from $8.76 billion.

For more, see Wednesday’s issue of WWD.
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