Once the initiative is fully implemented, the company expects to achieve annualized cost savings of approximately $35 million to $45 million, as well as incremental benefits to working capital and improved service to Avon Representatives. The cost savings are part of the company's previously announced multi-year restructuring plan.
"With these actions, we are transforming our U.S. distribution network, cost structure, and operating effectiveness as we continue to lay the foundation for Avon's return to sustainable growth," said Elizabeth A. Smith, Executive Vice President and President, North America and Global Marketing. "Our decision to restructure U.S. distribution will deliver a step-change in technology support for operations and also will enable a significant improvement in service to our U.S. Representatives," she added.
Avon said that it is in the process of evaluating potential locations for its new distribution center in the Midwest, with a decision expected to be announced in 2007. The company said that it expects the new distribution center to feature advanced picking technology to improve productivity and order accuracy, in addition to automated systems that will streamline process and work flow.
"The decision to phase-out our branches in Newark and Glenview was a difficult one, and the lengthy transition timelines will help support our hard-working and dedicated Associates as they plan the next phase of their careers," Smith said. "We are confident that the actions we are taking are the right long-term decisions for our business and our Representatives as we fortify our leadership in direct selling."
Avon continues to project that the total cost to implement all of its restructuring initiatives will be in the range of $500 million and that the annualized restructuring savings will exceed $300 million when the plan is fully realized.
-Ltd..jpg?tr=w-120,h-60,c-at_max,cm-pad_resize,bg-ffffff "Thermore (Far East) Ltd.")
.jpg?tr=w-120,h-60,c-at_max,cm-pad_resize,bg-ffffff "Telangana State Industrial Infrastructure Corporation Limited (TSllC Ltd)")
.jpg?tr=w-120,h-60,c-at_max,cm-pad_resize,bg-ffffff "Taiwan Textile Federation (TTF)")
