Avon Launches New Restructuring Program

Avon Products, Inc. announced that it now expects to achieve higher-than-anticipated annualized savings and benefits, approaching $900 million, from its original restructuring program and its product line simplification and strategic sourcing initiatives. The company also announced a new restructuring program targeting annualized savings of approximately $200 million when fully implemented.

"Our original restructuring program began in 2005, and over the last three years, we have been dramatically transforming our cost structure and exceeding our original savings estimates as we fix the fundamentals of our business," said Charles Cramb, vice chairman, chief finance and strategy officer, Avon. "Based on this progress, we expect the original restructuring program to deliver total savings of approximately $430 million by 2011–12. We also expect to realize annualized benefits from our product line simplification and strategic sourcing initiatives in excess of $200 million and $250 million, respectively, in 2010.

"Fueled by this success, we're also announcing that Avon will launch a new restructuring program that will target increasing levels of efficiency and organizational effectiveness across our global operations," said Cramb. "This reflects both our constant turnaround mentality and our determination to aggressively manage our cost structure as we address the current macro-economic challenges."

Avon said that the new restructuring program will focus on the company's global supply chain operations, realigning certain local business support functions to a more regional basis to drive increased efficiencies, and streamlining transaction-related services, including selective outsourcing. Further details will be announced when initiatives are finalized.

The company also noted that the new restructuring program is targeted to achieve annualized savings of approximately $200 million upon full implementation by 2012–13. Avon also said that the costs to implement the upcoming initiatives are expected to be in the range of $300–400 million, with implementation anticipated to start in the second half of 2009.