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Avon cuts 600 more jobs in North America as turnaround attempt continues

By Andrew McDougall+

24-Jun-2014
Last updated on 24-Jun-2014 at 16:25 GMT

Avon cuts 600 more jobs in North America as turnaround attempt continues

Avon continues its company restructuring by announcing that it will axe another 600 jobs as it looks to cut costs.

The cosmetics firm is trying to trim $400 million in spending by 2016 and says that the latest cuts should contribute $50-55 million in annual savings.

The announcement comes after the company reported an 11% Q1 sales drop, and the cuts are expected to largely take place "in the corporate organization and North America business unit."

Cost Savings Initiative

It follows a familiar trend at the direct seller, where sales have been steadily dropping and has seen Sheri McCoy, who became CEO in 2012, cut costs, slashe thousands of jobs and left unprofitable markets, in a bid to turn its fortunes around.

Avon says these steps are related to continued efforts to right size the cost structure, improve organizational effectiveness, streamline processes to gain efficiencies and reduce costs across the organization. 

It is not only the drop in sales that have been a cause for concern for Avon, as back in May, the New York-based firm said it would pay $135 million to settle a long-standing U.S. government probe into whether it paid bribes in China and other countries to gain favors.

Last year the company also cut 650 jobs worldwide as part of this same $400 million Cost Savings Initiative by 2016, to help get itself back on its feet.

Avon tells CosmeticsDesign.com USA that these actions, like those previously announced, are aimed at boosting efficiencies and concentrating resources on high priority markets and activities.

Questions

The news also comes after questions were raised over which markets were the most beneficial to Avon, with Forbes suggesting that North America and Asia have been the weakest links for the global beauty brand when it comes to product and channel presence.

The analysts report that in 2013, Avon’s revenue share from North America declined 17% to $1.46 billion, which also included the divestiture of its Silpada business in July of that year.

Reasons offered for this include the brand's reorganization of its' independent sales force during the second quarter, which resulted in severe disruption in customer-representative relationships.

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