Avon Expects New Business Initiatives to Contribute to Long-Term Growth
- Details Presented on New Avon Brand 'Becoming'; E-Representative Strategy and Global Health and Wellness Line Also Cited -
Sep 27, 2000
At an investor conference today hosted by Avon Products, Inc. (NYSE: AVP) the company said it expects its new business strategies to contribute significantly to its continuing growth.
"We're at a very exciting time in Avon's history," said Andrea Jung, the company's president and chief executive officer. "We're building on our 115-year heritage in direct selling and leveraging the strength of our well-known brand equity. Looking forward, we see significant opportunities to transform our business and continue to generate solid top-line growth."
New Brand at Retail.
Ms. Jung said that Avon's previously announced plans to sell a new brand at retail has potential to generate $200 to $300 million in sales by 2005. The company is negotiating to open 150 to 200 doors at Sears, Roebuck and Company (NYSE: S) and J.C. Penney Company, Inc. (NYSE: JCP) in the second half of 2001 as part of its "store-within-a-store" strategy. Avon said it would invest $10 million to $15 million in the new venture in 2001 and expects it to break-even in 2002.
Called "Becoming," the new Avon line will offer approximately 400 SKUs (stock keeping units) of beauty products, as well as a selection of jewelry and accessories and well-being products. The line will be priced significantly higher than the core Avon products sold in the company's sales brochure, but well below prestige brands.
Each store-within-a-store would be branded as an "Avon Center" and be circular in design, encompassing 400-600 square feet on average. Under the plan, Avon would share expenses with Sears and JCPenney relating to advertising and promotion, fixtures and staffing. Financial terms were not disclosed. To manage the new business, Avon is establishing a stand-alone retail division with dedicated staffing, including a new retail president being recruited from outside the company who will be announced shortly. The new unit will leverage Avon's product development and manufacturing capabilities, as well as the retail expertise of Sears and JCPenney.
Avon also named J. Walter Thompson as agency-of-record for advertising the new brand and attracting consumers to the "Avon Centers." For the past several months, J. Walter Thompson has worked with Avon to help create the brand vision for "Becoming."
E-representatives Go Live.
Avon also told investors that its newly re-vamped avon.com is going live today, with over 16,000 sales representatives signed up as "e-representatives," in the first segment of a phased launch.
E-representatives use personalized web pages to communicate with their customers, receive and process orders for products, check product availability and shipping status, create and send customer invoices, make payments to Avon, and manage other aspects of their Avon business online.
The Internet initiative should result in annual cost savings approaching $10 million in 2002 and has the potential to add 1% to Avon U.S. sales growth annually.
Health and Well-Being to Launch in 2001.
Avon also updated investors about its plans to launch a new global line of women's health and well-being products in the second quarter of 2001. The line will be sold in a separate catalog and include vitamins and nutritional supplements, exercise and fitness items, and a variety of products for self-care and stress relief.
The launch in 15 countries next year includes the U.S., Brazil, Mexico, Argentina and the U.K., which are the company's five largest markets and comprise 65% of total sales. Avon expects the overall women's health and well-being line to generate sales of $50 million in 2001, and $200 million to $300 million in 2005.
Avon also said that the launch of the new global wellness line will include approximately 20 initial concepts for vitamins and nutritional supplements, which are being developed exclusively for Avon by Roche Consumer Health. Called VitAdvance, the global brand will offer high-quality, science-based formulations designed to compete with market leaders in the category.
Avon is the world's leading direct seller of beauty and related products, with $5.3 billion in annual revenues. Avon markets to women in 137 countries through three million independent sales representatives. Avon product lines include such recognizable brands as Anew, Skin-So-Soft, Avon Color, Far Away, Rare Gold, Perceive and Avon Skin Care. Avon also markets an extensive line of fashion jewelry, apparel, gifts and collectibles. More information about Avon and its products can be found on the company's award-winning website http://www.avon.com/.
SOURCE: Avon Products, Inc.
Contact: Media - Kathleen Walas , 212-282-5140, or Victor Beaudet,
212-282-5344; Investors - Carol Murray-Negron or Renee Johansen, 212-282-5320,
all for Avon Products, Inc.
Company News On-Call: http://www.prnewswire.com/comp/079575.html or fax,
800-758-5804, ext. 079575
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