Avon 2007 Annual Report Download - page 5

Annual Report 2007
So in 2007, we advanced our strategic agenda
across each of our four beauty categories. We
also made the exciting announcement that
award-winning actress Reese Witherspoon
will serve as Avon’s new Global Ambassador,
representing our brand, our direct-selling
channel and our corporate philanthropy
programs. Reese will be featured in Avon
advertising starting in 2008.
Powerful Portfolio
Avon’s broad-based beauty strength is just one
dimension of our powerful global portfolio. In
addition to our diverse product categories, we
also gain significant leverage from our broad
geographic reach.
Avon’s direct selling model and world-famous
beauty brand appeal to women everywhere, and
we enjoy leading market shares in some of the
world’s fastest growing economies. We maintain
an important stronghold in the developing world
where we provide economic opportunities that
transform women’s lives.
In 2007, 13 of our developing markets grew
revenue 20% or more. Brazil was a top
performer for us once again, as we aggressively
took share from our beauty and direct selling
competitors. With revenue of over $1.3 billion
and over one million Active Representatives,
Brazil is Avon’s second largest market after the
United States.
China experienced breakout growth in 2007 as
we continued our successful rollout of direct
selling. In just a year and a half, we have recruited
hundreds of thousands of Active Representatives
in China, the fastest field ramp-up in Avon’s
history. We remain the only direct-selling company
to have been awarded a national license from the
Chinese government.
In 2007, we also saw outstanding progress in
a number of other priority markets, including
Russia, Turkey, Colombia and the Philippines, all
of which are benefiting from significant investment
in advertising and field initiatives. Record levels
of investment also helped drive a recovery in
developed markets, which reversed declines over
the past two years to post growth in 2007.
Powerful People
As we have expanded our business around the
world, our success is due in large part to the
powerful people of Avon and their extraordinary
entrepreneurial spirit. Over the past two years,
we have created a new organizational structure
that protects our entrepreneurial roots while also
leveraging our global size and scale to capitalize
on today’s new global opportunities.
We began in 2006 with a comprehensive
delayering of the organization, to reduce
management layers, increase speed of decision-
making and get closer to our Representatives
and customers. We continued in 2007 by fully
globalizing our product-to-market process
through the end-to-end integration of our
global business units: Global Brand Marketing,
Global Supply Chain, Global Direct Selling and
Global Information Technology. These business
units are now all aligned under Avon’s newly
appointed President, Liz Smith, who was named
to this role last September.
The establishment of our new global product-
to-market organization is enabling us to simplify
our product line to take cost and complexity out
of our systems. We are also gaining financial
leverage through strategic global sourcing as
we consolidate vendors and forge new supplier
partnerships.
By unleashing the power of our people, we are
also unleashing the financial resources that
will enable us to continue to invest for growth.
By 2012, we expect the financial benefits from
delayering and other restructuring initiatives,
combined with product line simplification and
strategic sourcing, to build to more than $830
million annually. These benefits will help us
to continue to fuel revenue growth while also
driving profitability.