Corporate Press Releases

Avon Reaffirms Second Quarter and Full-Year Earnings Outlook

Company Sees Potential Full-Year EPS Upside If Currencies Remain at Present Levels

Jun 3, 2003

Avon Products, Inc. (NYSE: AVP) today said it expects sales and earnings per share in the second quarter and full-year 2003 to increase in line with preliminary estimates the company provided on April 25. Avon also said that if foreign exchange rates remain at or near their current levels, full-year earnings could exceed its stated target of $2.55 per share.

Avon said it expects earnings in the second quarter to increase at a mid-single-digit rate over last year's second quarter earnings of $.64 per share. The company said earnings in the prior-year period included unusually high gains from currency hedging strategies that will not repeat in this year's second quarter.

The company also said today that sales growth in the second quarter should be in line with the first quarter, when sales were up 7% in dollars and 12% in local currencies versus prior year. Operating profit in the quarter is expected to increase approximately 15%.

Avon said overall sales growth is being driven by sales of beauty products, which are expected to increase 11-13%, including a double-digit increase in the U.S., and reflecting successful new product launches and Avon's continuing commitment to invest significant resources to support its brand-building strategies. Also driving sales is an expected double-digit increase in the number of active Representatives in the quarter.

Commenting on the outlook, Andrea Jung, Avon's chairman and chief executive officer, said, "The underlying health of Avon's business has never been stronger. That, combined with strengthening local currencies in some of our key markets, gives us confidence that 2003 will be another excellent year for the company.

"Europe continues to generate exceptional results, with second-quarter sales expected to be up over 30% in dollars and over 20% in local currencies, and dollar operating profits forecast to increase in the 40% range. Latin America should post a low-single-digit increase in dollar sales and a 15-20% increase in local currencies, while dollar operating profits should grow double-digits," Ms. Jung said. "Latin America's dollar-denominated sales and profit growth this quarter should be the strongest since 2001," she added.

"In Asia, sales in dollars and local currencies should be up in the low- to mid-single digits in the quarter, and dollar operating profits should grow at a higher rate than sales, driven by a continuing rebound in Japan and despite the anticipated impact of SARS in China and Taiwan," Ms. Jung said.

"In the U.S., sales are forecast to be up in the range of 3%, as previously expected. Sales growth is being driven by beauty products, which are tracking up 10%, and Representative growth, expected to be up a very healthy 3%. Operating profit should be flat in the U.S., reflecting significantly higher strategic investments in the quarter versus last year, including beauty advertising and support for the launch this summer of our new Mark brand for young women," Ms. Jung said.

Commenting on the full-year 2003 outlook, Ms. Jung said, "We are very pleased with where we stand at this point in the year and we look for another year of double-digit growth in local-currency sales as well as earnings per share. We are comfortable that we can at least achieve our earnings target of $2.55 per share and we are encouraged by the improving foreign currency picture, which could result in some upside for earnings if currencies remain at or near their present levels for the rest of the year."

Avon will review its strategies and financial performance today at the Sanford Bernstein Strategic Decisions Conference at 10 a.m. New York time. The conference will be webcast live, and instructions for accessing the webcast can be found on the Avon Investor website,

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 possible impact of SARS-related concerns on the Company's Asia-Pacific business and its Asia-based supply chain; 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, or Brian Martin,
+1-212-282-5103; or INVESTOR - Renee Johansen, or Rob Foresti,
+1-212-282-5320, all of Avon

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