Avon Issues Profit Warning for '05
NEW YORK — Citing the negative impact of Hurricane Katrina, higher fuel costs affecting its representatives and customers and general weakness in international markets, Avon Products Inc. reduced its full-year 2005 earnings forecast.

The $7.7 billion direct seller said it now expects full-year earnings — including previously announced tax benefits of 18 cents per share — to grow in the low to mid-single digits compared with prior-year earnings of $1.77 per share, which included tax benefits of 5 cents per share. Avon also expects full-year revenues to rise by mid-single digits, and operating profit for the year to be flat to down.

Avon's revision comes on the heels of the Estée Lauder Cos.' warning this week that due to rising fuel costs, as well as other factors, first-quarter earnings for 2006 will be "significantly below the same prior-year period."

Meanwhile, Avon chief executive officer Andrea Jung joined other business and political heavyweights — including Colin Powell, Richard Branson, Jack Welch, Rudy Giuliani and Terry Semel — speaking to hundreds of executives at the 2005 World Business Forum at Radio City Music Hall here last week.

And if The New York Times crossword puzzle is any indicator, Jung has made progress. "I'm a devoted crossword puzzle fan, and recently, for the first time, the four-letter word, second letter 'V' clue wasn't 'dingdong,'" she laughed. "It was, 'The company for women' And I thought, 'I've arrived!'"

Jung closed the conference with a discussion on women in leadership, a subject she said she dislikes, but feels passionate about.

"I can't wait until we no longer need these sorts of presentations," she said. Until then, however, she regaled the audience with statistics — today, only 8 percent of senior management positions are held by women and less than 1 percent of ceo's are women — and detailed how her company is encouraging more women leaders. Currently, her chief operating officer and half of the board are women. And the company has established a fast-track development system to bring women to more leadership positions.

Jung's other top priority is to bring Avon's products, and its mission, to new markets. India and China top the list, while the Middle East is a bit further down the road. "We want to go where women need us to help them become micro-entrepreneurs," she said.
— Molly Prior and Amy S. Choi

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