DOW JONES NEWSWIRES
Avon Products inc. (AVP) unveiled another round of streamlining,
disclosing plans to cut another $450 million in annual costs as the
cosmetics company continues its years-long restructuring.
The effort began in 2005 with a push to cut overhead and boost
compensation for sellers. That overall effort is now expected to
result in annual savings approaching $900 million.
Plans announced Thursday will produce $450 million in annual
cuts - $200 million from product line simplifications and $250
million from "strategic sourcing initiatives." Those benefits
should be realized by 2010. The moves are expected to cost Avon
$300 million to $400 million to implement.
The benefits from the original plan, begun in 2005, are expected
to reach $430 million by 2011-2012, bringing to total annual
savings from the restructuring to nearly $900 million.
Earlier this month, Avon said fourth-quarter net income rose 80%
amid year-earlier restructuring charges as revenue fell on the
stronger dollar and weaker volume.
Chairman and Chief Executive Andrea Jung said "it is prudent" to
assume this year will be "challenging."
Shares of Avon closed Wednesday at $19.82 and there was no
premarket trading.
-By Katherine E. Wegert, Dow Jones Newswires; 201-938-5294;
katherine.wegert@dowjones.com