UPDATE 1-Avon fourth-quarter sales fall; more sales reps drop out

Feb 13 (Reuters) - Avon Products Inc on Thursday reported lower-than-expected fourth-quarter revenue, as business fell in emerging markets that had been a source of growth for the beauty company as its North American business waned.

Revenue dropped 10 percent to $2.67 billion, while analysts expected $2.75 billion, according to Thomson Reuters I/B/E/S. Excluding the impact of foreign exchange, sales fell 4 percent.

During the quarter ended Dec. 31, Avon, a direct seller of beauty products, sold 10 percent fewer items, and the size of its sales force shrank 5 percent after showing signs of stabilizing earlier in 2013.

Avon, famous for decades in North America for its army of "Avon Ladies" sales representatives, has in recent years bet on emerging markets for growth.

But business fell in three major markets - Mexico, Russia and China. In North America, Avon's business continued to degenerate, with sales of beauty products down 25 percent, and with 17 percent fewer representatives.

A bright spot was Brazil, Avon's top market, where sales rose 6 percent, stripping out the impact of foreign exchange.

Avon's net loss narrowed to $69.1 million, or 16 cents per share, from $162.2 million, or 37 cents per share.