UPDATE 3-Avon adds reps and beats profit view; shares up

* EPS 38 cents ex-items; Wall Street view 34 cents

* Sales down 10 percent

* More sellers in down economy

* Shares up 7.5 percent (Adds CEO and analyst comments, details, byline)

By Aarthi Sivaraman

SEATTLE, July 30 (Reuters) - Avon Products Inc (AVP.N) posted a higher-than-expected quarterly profit on Thursday as it held costs down and the recession drew in more people to sell its cosmetics, sending its shares up 7.5 percent.

Avon has benefited as rising unemployment, salary cuts and reductions in hours have forced people to seek out ways to make extra cash, though its sales have suffered amid the recession.

Avon said the ranks of its "associates," who sell products such as Anew skin care and Jillian Dempsey makeup, increased 11 percent in the second quarter. The company operates through a network of such representatives and has been boosting efforts to recruit associates.

"Our game plan to navigate the recession is playing out as anticipated," Chief Executive Andrea Jung said on a conference call. "We are attracting record representatives to our channel with our message of economic opportunity."

Second-quarter net profit fell to $82.9 million, or 19 cents per share, from $235.6 million, or 55 cents a share, a year earlier.

Excluding restructuring charges, earnings were 38 cents a share, topping analysts' average forecast by 4 cents, according to Reuters Estimates.

Revenue fell 10 percent to $2.47 billion; analysts had expected $2.43 billion. Excluding the impact of the stronger dollar, sales rose 5 percent -- helped by the new associates, said Stifel Nicolaus analyst Mark Astrachan.

CUTTING COSTS

Avon has been cutting jobs and taking other steps to save money in the wake of sluggish sales. Its latest round of cuts includes overhauling its supply chain. The measures are expected to result in 1,200 job cuts by 2013.

During the second quarter, it cut general, administrative and other expenses by roughly $20 million.

Foreign exchange, coupled with the global economic slump, will continue to hurt its results for the foreseeable future, Avon said.

The company expects revenue growth in 2009 to be "somewhat lower" than its long-term rate, expected to average mid-single digits excluding the impact of foreign exchange.

Its steps to overhaul its sourcing chain and finished products, along with easing raw material costs, will help to partially offset the stronger dollar's impact, Avon said.

Elsewhere, peer Revlon Inc (REV.N) broke even in the second quarter, even as sales slipped about 12 percent. [ID:nN30329862]

And Sally Beauty Holdings Inc (SBH.N), which sells professional beauty supplies through sales consultants, posted an adjusted profit that matched Wall Street expectations. [ID:nN30329862]

Avon shares jumped 7.5 percent to $31.98 in afternoon trade on the New York Stock Exchange, while Revlon rose 7.4 percent to $6.08 and Sally slipped 7 cents to $6.96. (Additional reporting by Brad Dorfman and Jessica Wohl in Chicago; Amitha Rajan in Bangalore; Editing by Patrick Fitzgibbons and John Wallace)