Avon, the largest direct seller of cosmetics in the world, posted stronger sales growth than expected for first-quarter 2006, due largely to some strong product introductions.
Total revenue at New York-based Avon was $2.0 billion for the quarter, up 6% from $1.9 billion for the same quarter last year. Overall profit declined to $56.2 million from $172 million in Q1 2005. That decrease included costs related to restructuring the business: Avon is in the midst of a previously-announced multi-year reorganization in which it will cut jobs, increase marketing by 50% and take other steps to improve results.
The company increased advertising spending by 57% in the quarter to $40 million. “Along with actions aimed at streamlining our organization and reducing our cost structure, we are committed to improving our brand competitiveness,” said Andrea Jung, chairwoman and CEO, in a statement. “In particular, our large first-quarter increase in advertising is reflective of early action on this front, and we plan a similar lift in advertising spend in the second quarter.”
Avon’s first-quarter 2006 revenue in North America grew by 3%, driven largely by an increase in average orders due to new skincare products such as Anew Clinical Eye Lift and strength in the Beauty Plus category, the company said.
