Avon has outlined initial steps toward the company's previously communicated annual cost-savings target of $400 million by the end of 2015. The steps will include lay-offs -- Avon has said it will undergo a "targeted global headcount reduction of approximately 1,500 positions and related actions."
Avon has also announced that it will exit the South Korea and Vietnam markets. These actions are aimed at concentrating resources on high priority markets and activities and boosting efficiencies, and are expected to be largely completed before the end of 2013.
The cost to implement these actions is expected to be in the range of $80-90 million before taxes, of which approximately $50-60 million is expected to be recorded in the fourth quarter of 2012. The company anticipates that these initial steps will account for approximately 20% of the total targeted savings.
"In order to turn around the business, we are focused on driving top-line growth and aggressively managing our cost base," said Sheri McCoy, chief executive officer, Avon Products, Inc. "The decisions outlined today are necessary to stabilize the company and begin the process of returning Avon to sustainable growth."