Avon announces multi-year restructuring initiative

16 Nov '05

3 min read

Cosmetic Company Avon Products Inc announced a multi-year restructuring effort as part of a major drive to fuel revenue growth and strengthens overall performance.

-- Enhancement of organizational effectiveness, including efforts to flatten the organization and bring senior management closer to consumers through a substantial organization downsizing;

-- Implementation of a global manufacturing strategy through facilities realignment;

-- Additional supply chain efficiencies in the areas of procurement and distribution; and

-- streamlining of transactional and other services through outsourcing and moves to low-cost countries.

Avon expects to incur costs to implement these initiatives over the next several years, with a significant portion of the total costs to be incurred during 2006.

Costs are expected to total $300-$500 million before taxes, and the company projects that initial pre-tax costs of $20-$40 million, or $.04-$.07 per share after taxes, could be incurred in the fourth quarter 2005.

Avon said it will announce further details as initiatives are finalized.

The company expects that benefits from restructuring will help to fund a significant increase in consumer investment as well as improve the competitiveness of its direct selling opportunity.

Advertising, market intelligence, consumer research and product innovation will be funded at higher levels, with advertising spend projected to more than double by 2008.

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