LONDON, Jan. 30, 2019 /PRNewswire/ -- Avon Products,
Inc. (NYSE: AVP) ("the Company"), a globally recognised leader in
direct selling of beauty products, today announced significant
steps in the strategy to 'Open Up' Avon, particularly its efforts to simplify its
operating structure, reduce product line complexity and reduce
inventory holding levels.
Over the past several months, Avon has taken decisive action to identify and
capture cost savings within the Company's existing commercial
practices, supply chain operations and global infrastructure
footprint. In keeping with a focus on ensuring Avon's operations and infrastructure are
fit-for-purpose, the Company is pursuing a structural reset of its
inventory processes, including a 15% reduction in inventory levels
and 25% reduction in Stock Keeping Units (SKUs) and a 10% reduction
in its global headcount.
15% Inventory Reduction & Write-Off
Avon is taking a one-time
inventory obsolescence expense of approximately $88 million, as a result of its SKU reduction
efforts, which will advance the simplification of Avon's operations, drive cost savings through
lower raw material and procurement cost.
This reset will result in lower operational and ongoing
obsolescence costs. Over the longer term, it will result in a
more concentrated focus on high-turn, higher margin products,
driving greater earnings for Representatives due to lessened
discount pressure and enhanced service levels.
"Core to our 'Open Up' Avon
strategy is to have simpler, leaner operations, and for our
infrastructure and mindset to reflect Avon's reality. The initiatives announced
today all advance these objectives," said Jan Zijderveld, CEO of Avon. "This reset is an opportunity for us to
sharpen our portfolio and concentrate on products that are
important and relevant to our customer. This represents an
opportunity not just for Avon, but
for Her to accelerate her earnings through a more focused
portfolio, experience better service, and deliver high quality,
modern products she can be proud of."
10% Reduction in Global Workforce
The Company today also announced plans to reduce its global
workforce by approximately 10% to align with ongoing operating
model changes and to create a leaner organization that is better
aligned with Avon's current and
future business focus. These actions are expected to be
substantially completed by the end of 2019. This announcement
is on top of an 8% reduction of the global workforce completed in
2018.
Jan continued, "Decisions like these are always difficult,
however, we must take the actions necessary to improve our
operations and strengthen our ability to continue investing in our
transformation initiatives and fuel our future growth. I would like
to express my sincere gratitude to the talented employees affected
by this restructuring, and we will do our utmost to ensure everyone
is treated with fairness and respect."
In connection with the reduction in force announced today, the
Company expects to achieve annualized pre-tax savings of
approximately $97 million by the end
of 2019. The Company expects to record total charges related to
these actions of approximately $100
million before taxes incremental to the approximately
$51 million in charges associated
with Open Up Avon that had been approved to date.
About Avon Products, Inc.
For 130 years Avon has stood
for women: providing innovative, quality beauty products which are
primarily sold to women, through women.
Millions of independent Representatives across the world sell
iconic Avon brands such as Avon Color and ANEW through their social
networks, building their own beauty businesses on a full- or
part-time basis. Avon
supports women's empowerment, entrepreneurship and well-being and
has donated over $1billion to women's
causes through Avon and the Avon
Foundation. Learn more about Avon and its products at
www.avonworldwide.com.
Forward-Looking Statements
This press release contains "forward-looking statements" that
are made pursuant to the safe harbor provisions of the Private
Securities Litigation Reform Act of 1995, including statements
relating to cost savings. Because forward-looking statements
inherently involve risks and uncertainties, actual future results
may differ materially from those expressed or implied by such
forward-looking statements. These risks and uncertainties
include, but are not limited to, the possibility of business
disruption, competitive uncertainties, and general economic and
business conditions in Avon's
markets as well as the other risks detailed in Avon's filings with the Securities and
Exchange Commission. Avon
undertakes no obligation to update any statements in this press
release for changes that happen after the date of this release.
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SOURCE Avon Products, Inc.