Cosmetic Company Avon comments on restructuring program

25 Feb '06

3 min read

Fragrance maker Avon Products Inc said that the cost to implement its multi-year, four-part turnaround plan would be at the high end of its previously announced $300 million to $500 million range.

After a detailed financial review, the company said that it anticipates restructuring costs for all initiatives to total in the range of $500 million, with implementation continuing over the next three years.

Avon also said it expects to realize annual savings in excess of $300 million when the restructuring is completed.

The company said that its largest savings will come from actions to improve organizational effectiveness by removing layers of management and broadening spans of control throughout its global organization.

Avon's early actions have been focused in this area.

This delayering program is projected to be completed during 2006 and to ultimately yield approximately $150 million in annual savings.

The company intends to undertake other projects focused on realigning its global manufacturing base; improving procurement and distribution processes; and regionalizing, centralizing and outsourcing certain activities and transactional processes.

Avon said it expects to re-invest a large portion of its restructuring savings back into its business to drive sustainable revenue growth.

Savings are to be spent on increased advertising, enhanced support and programs for its Representatives, additional product research and development and market research.

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