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Avon to restructure US distribution operations
10 Jan '07
3 min read
Avon Products Inc announced plans to restructure its U.S. distribution operations to enhance service to its Representatives, improve operating efficiencies through new technologies, and achieve other cost savings that can be reinvested in business growth.
The initiative, which is part of the company's previously announced multi-year turnaround plan, includes the building of a state-of-the-art distribution center in the Midwest that will open in 2009. The facility will employ in the range of 500 people when fully operational and will have capacity to ship 50% of U.S. sales volume.
Avon also said that it will phase-out its current distribution branches in Newark, Delaware, and Glenview, Illinois, with the closures expected to be completed by mid-2009 and mid-2010, respectively, with a combined loss of approximately 620 positions.
Avon said that it expects to invest approximately $150 million in capital expenditures relating to the new distribution center and for technology and equipment upgrades in other branches. The company plans to upgrade and modernize its Atlanta-based distribution center, and is evaluating options for investing in a new warehouse management system for the Pasadena site.
In addition, Avon said that it expects to record approximately $20 million of charges relating to the restructuring of U.S. distribution in the fourth quarter 2006 for employee-related costs. The company said that it will incur additional expenses totaling approximately $65 million over the next several years, including transition costs and accelerated depreciation on equipment. In addition, Avon expects a net gain of approximately $25 million from the sales of the Newark and Glenview facilities at the end of the project period.
The initiative, which is part of the company's previously announced multi-year turnaround plan, includes the building of a state-of-the-art distribution center in the Midwest that will open in 2009. The facility will employ in the range of 500 people when fully operational and will have capacity to ship 50% of U.S. sales volume.
Avon also said that it will phase-out its current distribution branches in Newark, Delaware, and Glenview, Illinois, with the closures expected to be completed by mid-2009 and mid-2010, respectively, with a combined loss of approximately 620 positions.
Avon said that it expects to invest approximately $150 million in capital expenditures relating to the new distribution center and for technology and equipment upgrades in other branches. The company plans to upgrade and modernize its Atlanta-based distribution center, and is evaluating options for investing in a new warehouse management system for the Pasadena site.
In addition, Avon said that it expects to record approximately $20 million of charges relating to the restructuring of U.S. distribution in the fourth quarter 2006 for employee-related costs. The company said that it will incur additional expenses totaling approximately $65 million over the next several years, including transition costs and accelerated depreciation on equipment. In addition, Avon expects a net gain of approximately $25 million from the sales of the Newark and Glenview facilities at the end of the project period.
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