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NEW YORK — Avon Products Inc. managed a 74.8 percent rise in fourth-quarter profits, with year-ago charges easing comparisions.

This story first appeared in the February 5, 2003 issue of WWD.  Subscribe Today.

Net income for the quarter ended Dec. 31 rose to $193 million, or 80 cents a diluted share. This compared with profits of $110.4 million, or 46 cents, a year ago, when the firm’s bottom line was dragged down by an aftertax charge of $68.3 million, or 28 cents, related to its business transformation initiatives. Without the year-ago charge, profits rose 8 percent.

Profits came in a penny ahead of the firm’s guidance for 79 cents a share during the quarter. Investors traded up shares of the firm $1.18, or 2.4 percent, to close Tuesday at $51.18 on the New York Stock Exchange.

Revenues for the quarter strengthened 5.7 percent to $1.85 billion from $1.75 billion a year ago. Without the negative effect of currency translation, sales were up 14 percent. Units grew by 16 percent, while the number of active representatives rose 13 percent.

Taken together, last year marked “the strongest year in Avon’s recent history,” said chairman and chief executive officer Andrea Jung on a conference call. Having passed what she described as “an inflection point,” the ceo said Avon is heading into “an era of break-out growth for the company.”

The year did not pass without its disappointments, though. Last week, Avon said it would undertake a “strategic repositioning” of its BeComing brand, as reported. The repositioning includes pulling the brand out of approximately 90 J.C. Penney doors, which are dedicating the space to expanded accessories assortments.

This spring, the firm’s beauty advisers will begin selling BeComing fragrance, color and skin care products. The move will exact a price of approximately 5 cents to 6 cents a share on the bottom line, mostly in the first quarter. In its new incarnation, the company anticipates the brand will pull in sales of $20 million to $30 million for its first full year.

Avon doesn’t consider itself out of the retail game, though. Steve Bock will stay on as retail president to develop the firm’s long-term strategy, which could include an acquisition. “Certainly, nonorganic entry has to be a strategic option,” said Jung on the call.

In the U.S., Avon’s sales grew by 6 percent and produced a 14 percent rise in operating profits during the quarter. Beauty sales in the region were ahead 14 percent while units rose by 10 percent.

Sales in Europe shot up 28 percent, producing a 37 percent increase in operating profits. The results were driven by what the firm said was “rapid and profitable” expansion in Russia and Central/Eastern Europe as well as double-digit sales and profit growth in Britain.

The Pacific region’s sales perked up 9 percent, while operating income advanced 21 percent. Sales in China grew by 37 percent.

In Latin America, Avon’s sales dropped 12 percent, while operating profits were off 11 percent. Taking into account currency translation, sales were up 23 percent, while operating profits gained 17 percent.

For the year, income rose 20.2 percent to $534.6 million, or $2.22 a diluted share, from $444.6 million, or $1.85, a year ago.

Revenues for the 12 months inched up 3.8 percent to $6.23 billion from $6 billion the proceeding year. Sales climbed 11 percent, without the effect of currency translation.

This year, Avon is looking for earnings per share of $2.55.