Who knew Avon Products (NYSE:AVP) sold insect repellant for kids and all kinds of goodies for men? If you look at its second-quarter results, it appears everyone is aware.

The world's largest direct seller of cosmetics topped its recently raised outlook for the second quarter by $0.03 per share, generating a 35% increase in profit to a level of $232.3 million, or $0.49 per share, compared with $171.5 million, or $0.36 per share, a year ago.

As a result of the successful quarter, Avon raised its full-year earnings outlook once again to $1.72 per share. Unfortunately, those pesky analysts were already anticipating a beautiful performance and were expecting the company's guidance to be raised by one more penny to $1.73 per share. This "disappointment" apparently outweighed the plethora of positive news and pushed the stock down in trading yesterday by 1.7%.

In my opinion, there are simply too many positives for the decline to be justified. Operating profit climbed 16%, and operating margin improved to 17.4%. Net cash from operations grew to $240 million, and sales... let me tell you about sales. (Is it just me, or do I sound like an Avon Lady now?)

Avon's sales improved in every geographic region and climbed 13% to $1.84 billion overall. The U.S. market -- Avon's largest -- produced the smallest increase in sales at 3% growth. Europe continued its strong growth, reporting a 28% increase in sales. The region was boosted by Russia, which is Avon's fastest-growing market and posted an 80% sales increase. The U.K. reported a 20% increase in sales. Latin America also outpaced the U.S., generating 10% sales growth. And last, but certainly not least, the Asia Pacific region grew sales by 20%, thanks to 60% growth in China.

Avon's strong performance in China is particularly impressive considering the obstacles it's had to overcome after the government there banned all door-to-door selling. Recognizing the enormous growth potential in the country, Avon modified its business model and now operates more than 5,500 small stores called beauty boutiques and sells its products in more than 1,600 beauty centers at local department stores. The company expects to post sales of $200 million from China in 2004 and plans to open 500 boutiques a year for the next few years. Avon received some good news when it was recently announced that China might soon be lifting its ban on direct selling, which would further boost Avon's sales in the country.

All this good news and I didn't even get to discuss Avon's lovely 2.6% dividend yield. With payouts like that and its enormous growth potential, Avon and its investors should be sitting pretty for a long time to come.

Although his wife is considering becoming an Avon Lady to earn some extra cash, Fool contributor Mike Cianciolo doesn't own any stake in the company.