Avon To Cut 1,500 Jobs, Saying It Will 'Stabilize' The Company

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Avon Products job cuts

NEW YORK -- Avon Products said it will cut about 1,500 jobs and exit two Asian markets -- South Korea and Vietnam -- as the struggling beauty products seller takes some initial steps toward its cost-cutting goal.

The job cuts amount to almost 4 percent of its workforce and marked one of the first major moves by CEO Sheri McCoy, who was brought on in April to replace longtime CEO Andrea Jung.

"The decisions outlined today are necessary to stabilize the company and begin the process of returning Avon to sustainable growth," McCoy said in a statement.

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The New York-based direct beauty products seller said late Tuesday that it plans to focus on high priority markets as part of a push to save $400 million by 2015. The initial steps are expected to be largely completed by the end of next year.

Avon Products Inc., which makes Skin So Soft lotion and Mark makeup, has struggled this year to improve its performance after suffering through declining sales, a bribery investigation and other issues. In addition to hiring a new CEO, the company has tried to cut costs and focus on improving sales through international markets.

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Pre-tax costs related to the moves are expected to total between $80 million and $90 million. Avon will take a charge of between $50 million and $60 million in the fourth quarter tied to the cost cutting. It said that initial steps will account for about 20 percent of its savings goal.

On Dec. 31, the company employed about 40,600 people including about 5,400 in the U.S. and 35,200 in other countries.

In November, Avon reported an 81 percent drop in third-quarter net income, hurt by a stronger dollar and a hefty impairment charge. Its adjusted loss also fell short of Wall Street expectations.

At that time, the company said it planned to cut costs to save $400 million in three years. It also slashed its quarterly dividend to 6 cents from 23 cents.

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Meanwhile, the company still faces long-running bribery investigations. The problems began in 2008, when it started to investigate possible bribery in China related to travel, entertainment and other expenses, and soon widened the probe to other countries, with the Securities and Exchange Commission and Justice Department getting involved.

In September, the SEC decided it wouldn't recommend any action against the company over whether Avon contacted analysts inappropriately during a separate bribery investigation. But Avon still faces wider probes about possible bribery in China and other countries.

Founded in 1886, Avon became a fixture in households across the United States as its legions of "Avon ladies" went door to door selling makeup to family, friends and acquaintances.

Today, the company markets to women in more than 100 countries via 6 million independent sellers.

Its shares finished at $14.47 in trading Tuesday. Its shares are up from a 52-week low of $13.70 in mid-November. They traded as high as $23.58 in mid-April.


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Floyd

I have spent a lot of money on Avon produts, had I known that only 5400 out of 40,600 employee are in the United States, that's horrible.

December 15 2012 at 8:24 PM Report abuse rate up rate down Reply
Bill Ridenour

"The Private Sector is doing fine".

December 13 2012 at 10:19 AM Report abuse rate up rate down Reply
Jo

Avon is the LOUSIEST stuff on the planet. The colognes stink when applied. Skin So Soft is like taking a bath in cooking oil. Their jewelry is junk and their clothing poorly made.

Brand-name time-tested makeup is available for far less in big box stores, you don't have to wait to get the items, and scents are available in trial sized bottles that are good for a couple of uses, not just a swab and sniff tester.

AVON = YUCK, so no loss.

December 13 2012 at 8:18 AM Report abuse rate up rate down Reply
Brenda

Avon is expensive...You can get just about the same thing at WalMart or other stores...People pay for the name as with any popular brand...

December 13 2012 at 7:03 AM Report abuse rate up rate down Reply
clyogi

Expect another million employees to get fired early next year when BO's tax increases go into effect for the people who do the hiring around the country. I am still waiting for BO or any of his people to explain to the American people how these tax increases will help create more jobs in this country. Why, because they cannot!!
Jay Carney, the mouthpiece in the White House, won't even try because this tax increase is totally political and harmful to the economy. Perhaps, we should really look at the people who are not paying their fair share (ie, the people who pay no income taxes whatsoever). Oh wait, these people pay FICA and Medicare taxes which apply to two very specific expenses only. BO and Jay, you are full of poop and you have your ignorant base believing you. As I recently heard of television most of BO's followers actually believe that the fiscal cliff is a rock climbing event scheduled for the end of the year!!!

December 13 2012 at 2:59 AM Report abuse rate up rate down Reply
Rhianon

I can't believe people use Avon products still. Their makeup is at the bottom of the line. Their perfume stinks. Their deordorant is cheap and doesn't work. Their accessories for kids are overpriced. Their lingerie and bras are the same thing I can buy at the dept. store on sale. Never order from their catalogues. You can get Avon on Ebay for nothing. Just sayin'.............

December 13 2012 at 2:37 AM Report abuse -1 rate up rate down Reply
danno

Hummm another company drops yet more employees for the obvious reason this makes around eight thousand from four seperate compnys IN THE LAST FOUR MONTHS.. HUMMMM.. 2013 CAN BE QUITE GLOOMY...why????.BARACK HUSSEIN OBAMA..

December 13 2012 at 12:42 AM Report abuse +3 rate up rate down Reply
eternalhealth1

I love their products, yet they are all made in China. It seems as though everyone is re-acting to the fiscal cliff before the problems of the fiscal cliff are solved.

December 12 2012 at 4:14 PM Report abuse rate up rate down Reply
howlar2

Another Obama success story.

December 12 2012 at 4:12 PM Report abuse +5 rate up rate down Reply
1 reply to howlar2's comment
genowhitaker

How is mismanagement President Obama's fault? Avon has been mismanaged for years. Its product line is dated. It is getting beat up by Mary Kay. It has been unable to reposition itself in the most competitive industry in the world-cosmetics. Any yet, as always, some yahoo manages to post that it is President Obama's fault. What a load of crap.

December 13 2012 at 12:17 AM Report abuse -3 rate up rate down Reply
toddisit

It's only stable at the top these days, overpaid CEO's and do nothing office trinkets.

December 12 2012 at 4:09 PM Report abuse -3 rate up rate down Reply

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