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Avon Details Restructuring Program

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By: Jamie Matusow

Editor-in-Chief

Avon Products projects that the cost to implement its multi-year, four-part turnaround plan would be at the high end of its previously announced range. After a detailed financial review, the company says that it anticipates restructuring costs for all initiatives to total around $500 million, with implementation continuing over the next three years. Avon also says it expects to realize annual savings in excess of $300 million when the restructuring is completed.

According to Avon, the largest savings will come from actions to improve organizational effectiveness by removing layers of management and broadening spans of control throughout its global organization. The company intends to undertake other projects focused on realigning its global manufacturing base; improving procurement and distribution processes; and regionalizing, centralizing and outsourcing certain activities and transactional processes.

Avon says it expects to re-invest a large portion of its restructuring savings back into its business to drive sustainable revenue growth. Savings are to be spent on increased advertising, enhanced support and programs for its representatives, additional product research and development and market research.

The company projects revenue to be flat to up slightly in 2006, and forecasts revenue growth in local currencies that will average mid-single digits after 2006.

More information: www.avoncompany.com.

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