NEW YORK, June 23, 2014 /PRNewswire/ -- Avon Products,
Inc. (NYSE: AVP) today announced additional actions as part of the
company's ongoing turnaround efforts to return Avon to sustainable, profitable
growth.
These steps are related to continued efforts to right size the
cost structure, improve organizational effectiveness, streamline
processes to gain efficiencies and reduce cost across the
organization. These actions are primarily global headcount
reductions of approximately 600 positions, largely in the corporate
organization and North America
business unit.
Total charges to be recorded as a result of these actions are
expected to be approximately $45 million to
$50 million before taxes, with approximately $40 million expected to be recorded in the second
quarter of 2014.
The company expects these restructuring actions to result in
annualized savings of approximately $50
million to $55 million before taxes as part of the
$400 million Cost Savings
Initiative. In connection with the restructuring actions
approved to-date associated with the $400
million Cost Savings Initiative, we expect to realize
annualized before-tax savings of approximately $240 million to $250 million.
About Avon
Avon, the company for women, is
a leading global beauty company, with $10
billion in annual revenue. As one of the world's largest
direct sellers, Avon is sold
through more than 6 million active independent Avon Sales
Representatives. Avon products are
available in over 100 countries, and the product line includes
color cosmetics, skincare, fragrance, and fashion and home
products, featuring such well-recognized brand names as Avon Color,
ANEW, Skin-So-Soft, Advance Techniques, and mark. Learn more about
Avon and its products at
www.avoncompany.com.
CAUTIONARY STATEMENT FOR PURPOSES OF THE "SAFE HARBOR"
STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF
1995
Statements in this release that are not historical facts or
information may be forward-looking statements within the meaning of
the Private Securities Litigation Reform Act of 1995. Words such as
"expect" and similar expressions, or the negative of those
expressions, may identify forward-looking statements. They include,
among other things, statements regarding our anticipated or
expected results, future financial performance, various strategies
and initiatives (including our stabilization strategies, cost
savings initiatives, multi-year restructuring programs and other
initiatives and related actions), and costs and cost savings. Such
forward-looking statements are based on management's reasonable
current assumptions, expectations, plans and forecasts regarding
the Company's current or future results and future business and
economic conditions more generally. Such forward-looking statements
involve risks, uncertainties and other factors, which may cause the
actual results, levels of activity, performance or achievement of
Avon to be materially different
from any future results expressed or implied by such
forward-looking statements, and there can be no assurance that
actual results will not differ materially from management's
expectations. Such factors include, among others, the
following:
- our ability to improve our financial and operational
performance and execute fully our global business strategy,
including our ability to implement the key initiatives of, and
realize the projected benefits (in the amounts and time schedules
we expect) from, our stabilization strategies, cost savings
initiatives, multi-year restructuring programs and other
initiatives, product mix and pricing strategies, enterprise
resource planning, customer service initiatives, sales and
operation planning process, outsourcing strategies, Internet
platform and technology strategies, marketing and advertising
strategies, information technology and related system enhancements
and cash management, tax, foreign currency hedging and risk
management strategies, and any plans to invest these projected
benefits ahead of future growth;
- the possibility of business disruption in connection with our
stabilization strategies, cost savings initiatives, multi-year
restructuring programs, or other initiatives;
- our ability to reverse declining revenue, margins and net
income, particularly in North
America, and to achieve profitable growth, particularly in
our largest markets, such as Brazil, and developing and emerging markets,
such as Mexico and Russia;
- our ability to improve working capital and effectively manage
doubtful accounts and inventory and implement initiatives to reduce
inventory levels, including the potential impact on cash flows and
obsolescence;
- our ability to reverse declines in Active Representatives, to
implement our sales Leadership program globally, to generate
Representative activity, to increase the number of consumers served
per Representative and their engagement online, to enhance branding
and the Representative and consumer experience and increase
Representative productivity through field activation programs and
technology tools and enablers, to invest in the direct-selling
channel, and to compete with other direct-selling organizations to
recruit, retain and service Representatives and to continue to
innovate the direct-selling model;
- general economic and business conditions in our markets,
including social, economic and political uncertainties in the
international markets in our portfolio, such as in Russia and Ukraine, and any potential sanctions,
restrictions or responses to such conditions imposed by other
markets in which we operate;
- the effect of economic factors, including inflation and
fluctuations in interest rates and currency exchange rates, as well
as the designation of Venezuela as
a highly inflationary economy and the devaluation of its currency,
the availability of various foreign exchange systems, foreign
exchange restrictions, particularly currency restrictions in
Venezuela and Argentina, and the potential effect of such
factors on our business, results of operations and financial
condition;
- any developments in or consequences of investigations and
compliance reviews, and any litigation related thereto, including
the ongoing investigations and compliance reviews of Foreign
Corrupt Practices Act ("FCPA") and related United States ("U.S.") and foreign law matters
in China and additional countries,
as well as any disruption or adverse
consequences resulting from such investigations,
reviews, related actions or litigation, including our ability
to finalize settlements with the United States
Securities and Exchange Commission ("SEC") and the United States
Department of Justice ("DOJ") with regard to the ongoing FCPA
investigations on terms consistent with our current understandings
with the government or, if we are able to reach such final
settlements, what the timing of such final settlements will be or
whether the SEC settlement will be authorized by the Commission or
whether each of the settlements will receive the necessary court
approvals, or if we are unable to reach such final settlements, the
outcome of any subsequent litigation with the government which
could have a material adverse effect;
- a general economic downturn, a recession globally or in one or
more of our geographic regions, or sudden disruption in business
conditions, and the ability of our broad-based geographic portfolio
to withstand an economic downturn, recession, cost inflation,
commodity cost pressures, economic or political instability,
competitive or other market pressures or conditions;
- the effect of political, legal, tax and regulatory risks
imposed on us in the U.S. and abroad, our operations or our
Representatives, including foreign exchange or other restrictions,
adoption, interpretation and enforcement of foreign laws, including
in jurisdictions such as Brazil,
Russia, Venezuela and Argentina, and any changes thereto, as well as
reviews and investigations by government regulators that have
occurred or may occur from time to time, including, for example,
local regulatory scrutiny in China;
- the impact of changes in tax rates on the value of our deferred
tax assets, and declining earnings, including the amount of any
domestic source loss and the type, jurisdiction and timing of any
foreign source income, on our ability to realize foreign tax
credits in the U.S.;
- competitive uncertainties in our markets, including competition
from companies in the cosmetics, fragrances, skincare and
toiletries industry, some of which are larger than we are and have
greater resources;
- the impact of the adverse effect of rising energy, commodity
and raw material prices, changes in market trends, purchasing
habits of our consumers and changes in consumer preferences,
particularly given the global nature of our business and the
conduct of our business in primarily one channel;
- our ability to attract and retain key personnel;
- other sudden disruption in business operations beyond our
control as a result of events such as acts of terrorism or war,
natural disasters, pandemic situations, large-scale power outages
and similar events;
- key information technology systems, process or site outages and
disruptions;
- the risk of product or ingredient shortages resulting from our
concentration of sourcing in fewer suppliers;
- the impact of any significant restructuring charges or
significant legal or regulatory settlements on our ability to
comply with certain covenants in our debt instruments;
- any changes to our credit ratings and the impact of such
changes on our financing costs, rates, terms, debt service
obligations, access to lending sources and working capital
needs;
- the impact of our indebtedness, our access to cash and
financing, and our ability to secure financing or financing at
attractive rates;
- the impact of possible pension funding obligations, increased
pension expense and any changes in pension regulations or
interpretations thereof on our cash flow and results of
operations;
- our ability to successfully identify new business
opportunities, strategic alliances and strategic alternatives and
identify and analyze alliance and acquisition candidates, secure
financing on favorable terms and negotiate and consummate alliances
and acquisitions, as well as to successfully integrate or manage
any acquired business;
- disruption in our supply chain or manufacturing and
distribution operations;
- the quality, safety and efficacy of our products;
- the success of our research and development activities;
- our ability to protect our intellectual property rights;
and
- the risk of an adverse outcome in any material pending and
future litigation or with respect to the legal status of
Representatives.
Additional information identifying such factors is contained in
Item 1A of our 2013 Form 10-K, as updated by our Quarterly Report
on Form 10-Q for the quarterly period ended March 31, 2014, and other reports and documents
we file with the SEC. We undertake no obligation to update any such
forward-looking statements.
SOURCE Avon Products, Inc.