In line with its major initiative to boost brand competitiveness, Avon said it increased its advertising spend in the quarter by 57 percent to $40 million.
The company also recorded higher inventory obsolescence expenses in each of its segments, totaling $27 million, primarily to support its size-of-line reduction program.
Interest expense in the first quarter 2006 rose significantly year over year due to a higher debt level associated with the company's aggressive share repurchase program in late 2005, as well as higher interest rates.
The quarter's effective tax rate was 20.3 percent compared with 2005's rate of 31.5 percent.
The lower 2006 rate resulted primarily from favorable tax audit settlements, which more than offset the adverse impact of restructuring activity on the effective tax rate.
Net income in the first quarter 2006 was $56 million, compared with $172 million a year ago.
At quarter end, Avon's net debt had increased $36 million from the year-end level.
The company said it repurchased $43 million of its stock in the first quarter, and continues to repurchase its shares under an existing five-year, $1.0 billion repurchase authorization.
Global expenses, net of allocation to the operating segments, rose 93 percent largely due to $27 million in costs to implement restructuring initiatives.
Avon will conduct a conference call at 9:00 A.M. today to discuss the quarter's results. The dial-in number for the call is (973) 528-0014 (entry code 2272).
As the world's largest direct seller, Avon markets to women in well over 100 countries through over five million independent Avon Sales Representatives.
Avon's product line includes beauty products, fashion jewelry and apparel, and features such well-recognized brand names as Avon Color, Anew, Skin-So-Soft, Avon Solutions, Advance Techniques, Avon Naturals, Mark, and Avon Wellness.
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