Avon 2009 Annual Report Download - page 11

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Becoming a Stronger Company
With progress across so many dimensions, there is no doubt that in a very highly
challenging year — a year when many other companies retrenched and many
businesses failed — Avon captured significant market share.
On a reported basis, our revenue results reflected the negative impact of foreign
currency exchange, with overall revenue declining 3%. However, when you exclude
the impact of currency exchange, revenue in local currency increased 6%. This
represented one of the strongest performances in our sector. Following a low mid-
single digit increase in the fi rst quarter, local currency revenue growth accelerated
sequentially throughout the year, culminating in an exceptional fourth quarter
increase in the high single digits as we ended the year with exciting momentum.
For the full year, we saw strong local currency performances across 70% of our
geographic portfolio and we outran the GDP in eight of our top ten markets.
Overall revenue growth was fueled by a strong performance in Beauty. Although
on a reported basis Beauty revenue declined 3% as a result of the negative impact
of currency exchange, in local currency full-year Beauty revenue grew 7% with
accelerating momentum throughout the year. Very proudly we outperformed some
of our leading beauty competitors and gained significant beauty market share.
Unfavorable foreign exchange, combined with the costs to implement our
restructuring plans, negatively impacted our full-year operating margin of 9.8%
and earnings per share of $1.45. We ended the year with an eight-day reduction
in inventory (excluding the impact of currency exchange). We reduced our
net debt (total debt less cash) by almost $250 million and ended the year with
approximately $1.3 billion in cash. In February of this year, Avon’s Board of
Directors declared a 5% increase in our dividend, the 20th consecutive year of
dividend increases for our shareholders.
A Stronger Purpose
So we enter 2010 well-positioned for sustainable long-term growth. As more and
more Representatives discover the power of the Avon Earning Opportunity, our
goal is to retain them and increase their productivity by continuing to innovate
our business model. We will leverage technology and the viral power of the
Internet to build communities that connect Avon to our Representatives and our
Representatives to their Customers. With more and more consumers discovering
the smart value of Avon’s store, we will broaden our shopping opportunity with
new product categories that reinforce our beauty image and strengthen our
Customer relationships.
2009 Annual Report
An explanation of local currency which we also refer to
as constant dollars is provided on page 23 of this report.
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