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Avon: Bribery probe settlement could reach $132 million

Avon Products said Thursday it may cost as much as $132 million to settle a U.S. bribery investigation into the beauty products company's efforts to develop new markets overseas.

Avon cautioned there were no assurances it would reach a settlement and if it does, the company could not estimate its timing.

The Securities and Exchange Commission and the Department of Justice began an investigation in 2011, following an internal probe by Avon that started in 2008 into allegations of improper payments in China.

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Scott Eelis | Bloomberg | Getty Images

The world's largest direct seller of beauty products also reported lower-than-expected fourth-quarter revenue, as business fell in emerging markets that had been a source of growth as its North American business waned.

Revenue dropped 10 percent to $2.67 billion, while analysts expected $2.75 billion, according to Thomson Reuters. 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.

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"Much works remains to be done," said Chief Executive Sheri McCoy, who took the reins almost two years ago with a promise to turn around the company.

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. In China, sales fell by half.

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.

Avon sought to settle the U.S. probe with an offer to pay $12 million, but regulators wanted a "significantly greater" amount, the company said in October.

The company has already spent about $300 million on its internal probe.

—By Reuters.