Avon Q4 includes PLS charge of approximately $110 mn
09 Jan '08
3 min read
"Continuing transformation as part of a turnaround mentality is now a 'way of life' for Avon as we enter the third year of our turnaround. While we anticipate additional initiatives to further improve organization effectiveness and drive cost savings to fuel growth, they will not be reported as part of our turnaround plan."
Incremental PLS Charge: Avon also announced that under its Product Line Simplification (PLS) initiative, it has finalized its analysis to define its optimal product assortment and made decisions on exit strategies for non-optimal products. The company will record a charge of approximately $110 million in the fourth quarter, primarily for inventory write-offs resulting from the exit decisions taken.
In addition to the $430 million in savings from the restructuring program, the company continues to expect benefits from PLS to commence in the second half of 2008, and to reach a full annualized run rate in excess of $200 million by the end of 2009. Avon also said it does not anticipate any further PLS inventory charges in the future.
Summary of Latest Restructuring Initiatives: Direct Selling Restructuring. Avon said that the fourth quarter 2007 will include costs to restructure some of its international direct selling businesses, particularly in Continental Europe and most significantly in Germany, over the next two years. The actions are designed to dramatically reduce the company's cost base and improve productivity.