Avon Unveils More Restructuring Steps; Sees $450 Million Savings

   DOW JONES NEWSWIRES 
 

Avon Products inc. (AVP) unveiled another round of streamlining, disclosing plans to cut another $450 million in annual costs as the cosmetics company continues its years-long restructuring.

The effort began in 2005 with a push to cut overhead and boost compensation for sellers. That overall effort is now expected to result in annual savings approaching $900 million.

Plans announced Thursday will produce $450 million in annual cuts - $200 million from product line simplifications and $250 million from "strategic sourcing initiatives." Those benefits should be realized by 2010. The moves are expected to cost Avon $300 million to $400 million to implement.

The benefits from the original plan, begun in 2005, are expected to reach $430 million by 2011-2012, bringing to total annual savings from the restructuring to nearly $900 million.

Earlier this month, Avon said fourth-quarter net income rose 80% amid year-earlier restructuring charges as revenue fell on the stronger dollar and weaker volume.

Chairman and Chief Executive Andrea Jung said "it is prudent" to assume this year will be "challenging."

Shares of Avon closed Wednesday at $19.82 and there was no premarket trading.

-By Katherine E. Wegert, Dow Jones Newswires; 201-938-5294; [e-mail]