Avon 2010 Annual Report Download - page 8

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Empowering Women for 125 years
OPERATING MARGIN EXECUTION
Our investments in this new service proposition and other long-term growth initiatives will
be paced to ensure that we expand operating margin in 2011 and beyond. Expanding
operating margin is one of our most critical commitments to our shareholders. As we
started 2010, given our strong sales, we had fully anticipated that we would expand
operating margin even in the face of unexpected costs. As sales momentum slowed in
the back half of the year, this negatively impacted our operating margin performance.
As we begin 2011, the entire organization is aligned around the need to execute against
our operating margin target. We are moving aggressively to contain overhead costs.
We are recalibrating the timing of our longer-term investments. And, importantly, we have
tightly aligned management compensation around achieving a mid-teens operating
margin by 2013, with signifi cant improvement beginning this year.
In terms of the balance sheet, we recently announced our 20th consecutive year of
dividend increases for our shareholders. Also in 2010 we acquired two companies—
Liz Earle, a line of naturally active skincare products, and Silpada, the largest direct
seller of sterling silver jewelry. These are Avon’s fi rst major acquisitions in almost two
decades, and are part of our strategy to reach new customers with products at higher-
tier price points as we continue to position ourselves for future growth.
BUILDING ON A 125 YEAR HERITAGE OF SUCCESS
As we think about the future, we will continue to build on the unique advantage
conferred by our iconic Beauty brand and powerful Representative channel. Avon is by
far the largest engine of economic empowerment for women on earth. Our 6.5 million
Avon Representatives serve more than 300 million customers in over 100 countries. Avon
Representatives sell four lipsticks every single second of the day. They have sold one
billion dollars of ANEW, and they have made Avon number one in mass fragrance
worldwide.* The Avon sales brochure is the largest publication of any type in the world.
But beyond our powerful brand and sales channel, Avon is also a powerful force for
social good. In partnership with our Avon Representatives, we have raised and awarded
more than $800 million to causes that improve women’s lives. We are the largest
corporate supporter of the breast cancer cause and a leader in the fi ght to end violence
against women. Avon’s Hello Green Tomorrow program raised funds to plant 2 million
* Source: Euromonitor International; Beauty and Personal Care 2010; mass fragrances category; global values sales at retail selling price
for the year 2009; all retail channels.