Avon Details Final Restructuring Program Plans
Avon Products Inc. announces the final initiatives of the restructuring program under its turnaround plan, begun in late 2005. "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." The company now expects to achieve annualized savings of approximately $430 million once all initiatives are fully implemented by 2011-2012, compared to the original objective of $300 million. The company now anticipates total costs to implement the restructuring initiatives to be approximately $530 million instead of $500 million, of which the company will have recorded approximately $460 million through the fourth quarter of 2007 and the remainder by the end of 2009. As a result, the company expects to incur a charge of approximately $120 million in the fourth quarter 2007. Included in this charge are: restructuring of some international direct selling operations, most significantly in Germany ; realigning supply chain operations in Western Europe and Latin America ; outsourcing call centers and transaction processing functions; and several other minor initiatives. Costs associated with previously announced restructuring initiatives are also included in the fourth-quarter charge. Approximately 4,000 positions would be impacted globally, with a net reduction totaling approximately 2,400 positions when the initiatives are fully implemented.
