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Avon expects PLS & SSI to yield benefits exceeding $400 mn
16 Feb '07
3 min read
Avon Products Inc announced that it expects annualized benefits from Product Line Simplification (PLS) and its Strategic Sourcing Initiative (SSI) to exceed $400 million when fully realized.
Avon management will review these initiatives and its business strategies at a company-sponsored investor meeting here. The meeting will be webcast live beginning at 9:00 A.M. Eastern Time, Thursday, February 15, and later will be archived on Avon's investor website.
Coupled with savings from its previously announced restructuring program, Avon said total savings and benefits from the combined initiatives are expected to exceed $700 million.
"We are pleased that these incremental benefits will provide us with additional fuel with which to continue to drive our turnaround," said Andrea Jung, Avon's chairman and chief executive officer. "We are seeing strong paybacks from our investments to drive growth, and in 2007 we will again invest in the business at accelerated levels, to build a strong foundation for sustainable growth."
The company said it expects to realize initial benefits from Strategic Sourcing beginning in the second half of 2007, with total annualized benefits from this single initiative exceeding $200 million by the end of 2009.
Avon said it anticipates similar benefits from PLS, with benefits building progressively over the next three years. To date, the company has incurred costs of $81 million, primarily incremental inventory obsolescence, on this effort. Avon said additional costs associated with PLS, to be determined and sized as the company identifies its optimal product assortment over the next three years, may be in the range of $100 million.
Avon management will review these initiatives and its business strategies at a company-sponsored investor meeting here. The meeting will be webcast live beginning at 9:00 A.M. Eastern Time, Thursday, February 15, and later will be archived on Avon's investor website.
Coupled with savings from its previously announced restructuring program, Avon said total savings and benefits from the combined initiatives are expected to exceed $700 million.
"We are pleased that these incremental benefits will provide us with additional fuel with which to continue to drive our turnaround," said Andrea Jung, Avon's chairman and chief executive officer. "We are seeing strong paybacks from our investments to drive growth, and in 2007 we will again invest in the business at accelerated levels, to build a strong foundation for sustainable growth."
The company said it expects to realize initial benefits from Strategic Sourcing beginning in the second half of 2007, with total annualized benefits from this single initiative exceeding $200 million by the end of 2009.
Avon said it anticipates similar benefits from PLS, with benefits building progressively over the next three years. To date, the company has incurred costs of $81 million, primarily incremental inventory obsolescence, on this effort. Avon said additional costs associated with PLS, to be determined and sized as the company identifies its optimal product assortment over the next three years, may be in the range of $100 million.
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