Avon Products, Inc. (NYSE:AVP) plans to slash another 400 jobs and close its Irish market, as part of an earlier-announced multi-million dollar restructuring plan.
The NewYork-based world’s largest direct seller of cosmetics said Monday that the job cuts, which equate to about 1 per cent of Avon’s 39,100 employees, would take place across all regions and segments. With new CEO Sheri McCoy, this plan is devised to stabilize the business with the goal of achieving mid-single digit percentage revenue growth and $400 million in cost savings by 2016.
According to Bloomberg, the cosmetics seller expects $35 million to $40 million in pretax costs and about $20 million will be booked in the first quarter. The company intends to close operations in the less profitable markets in a move to focus what the company believes as “high priority” regions in Brazil.
McCoy, who became CEO in April 2012, announced in December that the company would leave Vietnam and South Korea and that it would cut 1,500 jobs in all.
“We continue to work aggressively toward turning around the business,” Avon Products, Inc. (NYSE:AVP) CEO Sheri McCoy said in a statement. “The steps outlined today take us closer to our cost-savings goal.”
Operations will be close in certain regions of Europe, most notably Ireland, as well as in the Middle East and Africa, while the layoffs will occur throughout 2013. While many companies have reportedly been moving operation to Ireland, mainly because of its substantially low corporate tax rates, Avon’s move to exit the region comes as a real surprise to the market analysts.
“While considerable work remains to be done to improve operating margin, we believe Avon Products, Inc. (NYSE:AVP) can return to a low double-digit margin,” Stifel analyst Mark Astrachan said.