Avon announces closures and job cuts as part of cost saving initiative
The direct-seller released further details of the company’s previously announced $400 million Cost Saving Initiative by 2016, in which a global headcount reduction of more than 400 associates across all regions and functions was announced.
The plan will also see the restructuring or closure of certain smaller, underperforming markets, primarily in Europe, Middle East & Africa, with the exit of the Republic of Ireland confirmed.
“We continue to work aggressively toward turning around the business,” said Avon CEO Sheri McCoy. “The steps outlined today take us closer to our cost-savings goal. At the same time, we remain focused on continuing to streamline the business and driving top-line growth.”
McCoy expects most of the restructuring to be complete by the end of 2013, and is aimed at boosting efficiencies and concentrating resources on high priority markets and activities.
The total charges related to the job cuts, closures and minimizing are expected to be in the range of $35 to $40 million before taxes and approximately $20 million of that total will be recorded in the first quarter of 2013.
Avon expects these actions to generate approximately $45 to $50 million in annualized savings, when fully implemented, as part of its $400 million cost savings goal.
It will not be the last we hear of the company’s cost savings initiative either as additional updates are expected given the mammoth task ahead for the beauty behemoth.
The latest announcement comes after Avon completed refinancing activities last month, in a bid to manage its large debt and improve the health of its balance sheet, which has been through a torrid time.
That will see the completion of a public offering of $1.5 billion in notes, as well as entering into a $1 billion four-year unsecured Revolving Credit Facility Agreement, which replaces the previous $1 billion Revolving Credit Facility Agreement.
"Through this refinancing, we have achieved increased financial flexibility, which is critical to our ability to successfully execute Avon's turnaround," said Kimberly Ross, Executive Vice President & Chief Financial Officer, Avon Products.