Avon Products Inc. (AVP) will cut its global headcount by more
than 400, restructure or close operations in Europe, Middle East
& Africa, and exit the Ireland market, continuing Chief
Executive Sheri McCoy's push to cut costs and streamline
operations.
Avon characterized the latest actions as a bid to take the focus
off certain smaller, underperforming markets and instead
concentrate on high priority markets and activities.
Avon expects the moves to be largely completed before the end of
the year. The company will take charges of $35 million to $40
million before taxes in connection with its actions, about $20
million of which will be recorded in the first quarter. It expects
the changes to generate about $45 million to $50 million in
annualized savings, when fully implemented.
The company has about 39,100 employees, according to
FactSet.
"We continue to work aggressively toward turning around the
business," Ms. McCoy said, noting the steps outlined Monday take
the door-to-door cosmetics vendor closer to its goal to cut $400
million in costs by 2016.
Last month, New York-based Avon, said it had completed
refinancing activities and entered into a $1 billion four-year
unsecured revolving credit agreement, helping to improve its
balance sheet.
Avon has faced deep investor dissatisfaction in the last year as
it failed to deal quickly with poor results in important overseas
markets, as well as a messy federal probe into allegations of
bribery of officials overseas.
The company, whose products are currently sold in more than 100
countries, has faced questions about the viability of its brand and
the long-term trajectory of its business, which depends largely on
sales generated by women who sell makeup, perfumes and lotions to
friends and family members. The company's previous attempts at
restructuring and reviving the business largely failed to put it
back on a growth track.
Ms. McCoy, who took helm of the company last April, has said
Avon will continue to cut costs as it works to stabilize sales and
produce sustainable profits.
Avon is reassessing its long-term business plan, and in December
said it will cut about 1,500 positions and also exit the South
Korea and Vietnam markets as part of its broader plan to save
costs. Ms. McCoy has pointed to Brazil, Russia and China as
countries where the company needs to grow.
In February, Avon posted a wider fourth-quarter loss as it took
a big provision against taxes and further wrote down the value of
its Silpada jewelry line though it reported progress in stabilizing
its sales.
Shares closed Friday at $20.26 and were inactive in recent
premarket trading. The stock has dropped 13% in the past 12
months.
Write to Saabira Chaudhuri at saabira.chaudhuri@dowjones.com
Subscribe to WSJ: http://online.wsj.com?mod=djnwires