Avon Products Inc reported weaker-than-expected fourth-quarter results as sales slid in every market except Latin America and the company saw a 3 percent drop in the number of representatives who sell its cosmetics directly to consumers.

Still, shares were up 3 percent as executives said they could announce cost cutting measures as early as this quarter and the company also maintained its dividend payment.

Avon is dealing with the fallout from an expensive internal bribery investigation that began in China in 2008 as well as a probe by federal prosecutors.

On Tuesday, it gave no update on the matters, which have cast a cloud over the company and its efforts to turn itself around.

The company's results point to a worrisome degradation in its business in Russia and Brazil, where Avon has banked on growth to mitigate a long-term slide in its home North American market.

Revenue fell 4 percent worldwide to $3 billion, missing Wall Street estimates.

The fourth-quarter revenue drop included a 1 percent decrease in Brazil, where Avon has been deviled by a new computer system that was poorly implemented and frustrated sales representatives there. Revenue fell 10 percent in Russia, where the company faced aggressive pricing from competitors.

The only bright spot was Mexico, where sales were up 12 percent in constant dollars.

Under Chief Executive Andrea Jung, Avon turned in poor performances in Brazil and Russia, poured tens of millions of dollars into its international bribery investigation and struggled to stem declines in a sluggish U.S. market.

Avon said in December that Jung would step down sometime in 2012.

The company said on Tuesday it would wait for her replacement, still to be named, to be in place before updating its business review, which was initially to be presented in early 2012.

Jung, CEO since 1999, said in a statement on Tuesday that the focus in 2012 would be sales improvements and containing costs, rather than improvement in its margins.

Avon, which relies on its legion of 6 million salespeople, said the number of active representatives fell 3 percent, including sharp declines in North America and Russia. One analyst said that was the worst drop in more than a decade.

The cosmetics direct seller reported a net loss of $400,000, or nil per share, on sales of $3 billion in the quarter ended December 31, compared to net income of $229.5 million, of 53 cents per shares, on sales of $3.14 billion a year earlier.

Excluding some items, Avon made 39 cents per share from continuing operations, well below the 51 cents Wall Street analysts were expecting.

Avon plans to maintain its annual dividend of 92 cents in 2012. But Avon's former CFO in October said Avon had difficulty funding its dividend with free cash flow.

BMO Capital Markets analyst Connie Maneaty said in a note that Avon would likely have to borrow money to pay the dividend.

And in a sign that Avon is struggling with acquisitions it made to win new customers, the company took a $263-million impairment charge for Silpada, which it bought in 2010 for $650 million, blaming rising silver costs for hits sales.

On the legal front, Avon launched a full internal inquiry in 2008 into whether it violated U.S. anti-corruption laws through its business in China, but prosecutors are examining a draft internal report from 2005 that flagged similar concerns, two people familiar with the matter said on Monday.

In 2006, Avon won the first-ever license given by China to a Western company to sell products door-to-door and was seen as a major coup by Jung.

Prosecutors have presented evidence to a grand jury, the Wall Street Journal reported.

The company has said only that U.S. regulators were also investigating it.

Avon shares were up 60 cents to $18.13 in premarket trading.

(Reporting By Phil Wahba in New York; Editing by Derek Caney)

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