Avon to Cut More Jobs

Beauty firm to shed 1,200 positions.

Avon Products Inc. said Wednesday it will restructure and eliminate about 1,200 jobs in the next three to four years, putting itself on track for $200 million in annual savings.

This story first appeared in the July 23, 2009 issue of WWD.  Subscribe Today.

Details of the realignment, first outlined in February, include the shutdown of manufacturing facilities in Springdale, Ohio, and Neufahrn, Germany; the streamlining of a facility in Naro-Forminsk, Russia, and more centralized structures for Latin America and the division covering Western Europe, the Middle East and North Africa.

“The initiatives announced today result from our ‘constant turnaround mentality’ and reflect our continuing determination to transform our cost structure, improve operating efficiencies, and be a stronger competitor globally,” said Charles Cramb, vice chairman and chief finance and strategy officer.

Cramb said Avon was on track to achieve $200 million in annual savings by 2012-13 and total costs for the plan would range from $300 million to $400 million. To date, the realignment has cost about $165 million, including a $77 million pretax change to be levied on second-quarter results. The initiatives laid out so far are expected to generate about 60 percent of the savings.

The Springdale plant will be closed by mid-2012 and its production will be moved to Morton Grove, Ill.; Celaya, Mexico, and contract manufacturers. A return goods operation there will also close and a call center will be relocated.

Along with $13 million in costs related to a 2005 restructuring program, the firm expects charges of about $90 million, or 19 cents a share, when it reports second-quarter results July 30.

For the first quarter ended March 31, Avon’s profits fell 36.5 percent to $117.3 million on a 13 percent decline in revenues.

As of Dec. 31, the New York-based firm had 42,000 employees, 6,100 of them in the U.S.

Avon shares fell 15 cents, or 0.5 percent, to $28.67 Wednesday. The stock has traded as low as $14.40 and as high as $45.34 over the last year.