Corporate Press Releases

Avon Raises Targets for Sales Growth by 2-3 Points Per Year Beginning in 2004

"Next Generation" of Business Transformation Announced; 20% Operating Margin Targeted for 2007

EPS Expected to Continue Growing at Least 10% Annually

Mar 28, 2003

Avon Products, Inc. (NYSE: AVP) provided a strategic update and longer-term outlook for its business at a company-sponsored meeting here today. The meeting was webcast live and is archived on Avon's investor website,

Avon said that due to the ongoing success of its growth strategies it has raised its target for annual sales growth to 12-13% in local currencies beginning in 2004, from the 10% target it established in 2001. Sales growth will be driven by further expansion of Sales Leadership, a career opportunity for Avon Representatives, as well as a concerted focus on beauty, including new beauty brands targeted at new consumer segments.

Avon also said that it expects its "next generation" of Business Transformation initiatives to produce further margin expansion. As a result, the company is now targeting a 100 basis-point increase in gross margin each year for 2003-2007 and has set an operating margin goal of 20% by year-end 2007.

The company also said it expects earnings per share to continue growing at least 10% annually, which is consistent with its previous targets.

The company's cash flow from operations is expected to increase significantly, with a target of $1 billion annually in 2007. The company's 2003 cash flow is estimated to be $650-700 million.

Avon said it is targeting a major increase in incremental strategic spending. As a percentage of sales, strategic investments should grow from about 8% in 2003 to 10% in 2007, indicating an increase of about $250-300 million on an annual basis by 2007.

Avon is the world's leading direct seller of beauty and related products, with $6.2 billion in annual revenues. Avon markets to women in 143 countries through 3.9 million independent sales Representatives. Avon product lines include such recognizable brands as Avon Color, Anew, Skin-So-Soft, Advance Techniques Hair Care, beComing and Avon Wellness. Avon also markets an extensive line of fashion jewelry and apparel. More information about Avon and its products can be found on the company's web site

       Cautionary Statement under the Private Securities Litigation
                            Reform Act of 1995

Statements in this release, which are not historical facts or information, are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements are based on management's reasonable current assumptions and expectations. Such forward-looking statements involve risks, uncertainties and other factors, which may cause the actual results levels of activity, performance or achievement of the Company to be materially different from any future results expressed or implied by such forward-looking statements, and there can be no assurance that actual results will not differ materially from management's expectations. Such factors include, among others, the following: general economic and business conditions in the Company's markets, including economic and political uncertainties in Latin America; the Company's ability to implement its business strategy and its Business Transformation initiatives, including the integration of similar activities across markets to achieve efficiencies; the Company's ability to achieve anticipated cost savings and its profitability and growth targets; the impact of substantial currency fluctuations in the Company's principal foreign markets and the success of the Company's foreign currency hedging and risk management strategies; the impact of possible pension funding obligations and increased pension expense on the Company's cash flow and results of operations; the effect of legal and regulatory proceedings, as well as restrictions imposed on the Company, its operations or its Representatives by foreign governments. The Company's ability to successfully identify new business opportunities; the Company's access to financing; and the Company's ability to attract and retain key executives. Additional information identifying such factors is contained in the Company's Form 10-K report for the year ended December 31, 2002, filed with the SEC. The Company undertakes no obligation to update any such forward-looking statements.

SOURCE: Avon Products, Inc.

CONTACT: Media - Victor Beaudet, +1-212-282-5344, Brian Martin,
+1-212-282-5103, Investors - Renee Johansen or Rob Foresti, +1-212-282-5320,
all of Avon

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