To Our Shareholders:
I am writing you at a time of momentous change for your company. After 12 years as Avon’s CEO, I believe that the time is right to recruit a new CEO to lead the company’s next chapter. As Avon’s Chairman, I am committed to ensuring a successful management transition, maintaining our strong relationships with approximately 6.4 million active independent Representatives worldwide, and working with the new CEO in supporting the company’s strategic direction and brand positioning.
On a personal note, it has been a true privilege leading Avon as CEO since 1999, as we have grown the company from a decentralized group of local operating entities to a globally managed business with global brands and a global operating model. During this time, revenues more than doubled to $11.3 billion, the number of Representatives also doubled and we expanded our reach to women in more than 100 markets around the world. Looking to the future, a new CEO will provide a fresh lens and additional operational capabilities to manage a company of Avon’s increasing size and scale. With the Beauty and Direct Selling industries growing, coupled with our broad geographic footprint, Avon continues to have significant growth opportunities. To capitalize on these opportunities, however, we will need to address the near-term challenges which have slowed the company’s recent revenue growth. In 2011, revenues were up 4% or 1% in constant dollars,* compared with the mid-single digit constant-dollar growth we have seen on average over the past five years. At the same time, Avon posted approximately $1.2 billion adjusted operating profit* and generated over $650 million in cash from operating activities. In line with this, we declared a $0.92 dividend in 2011 and stated our commitment to maintain this dividend in 2012.
