Avon to slash workforce by another 10%
Beauty brand Avon Products, Inc. on Wednesday announced new steps in a strategy first announced in September, dubbed "Open Up" Avon. The efforts aim to "simplify its operating structure, reduce product line complexity and reduce inventory holding levels," according to a company press release.
As part of the revised plan, the company is reducing its global workforce by 10%, inventory levels by 15% and SKUs by 25% by the end of the year. The company slashed 8% of its total work force last year.
"This reset is an opportunity for us to sharpen our portfolio and concentrate on products that are important and relevant to our customer," Avon CEO Jan Zijderveld said in a statement.
Avon, a 130-year-old legacy beauty brand, is known as a leader in the multi-level marketing world. Over decades, the brand built up a loyal following largely through a base of millions of independent representatives from around the world.
But as consumer buying preferences have changed, so too has its strategy for growth, as sales have lagged in recent years. In the company's most recently reported quarter, which ended Sept. 30, Zijderveld said the brand is still in the early stages of its turnaround plan to reboot its sales model, and he stressed that it will take time to see progress. The implementation of the turnaround is expected to generate $400 million over the next three years, the company said in November.
Executing this new plan will fall to new executives. Earlier this month, the company appointed a new VP of digital development, Nick Burton. In his new role, he will focus on growing the company's digital sales model and "e-enabling" its representatives to access more consumers they may not be able to reach in person. And last month, the brand tapped Gustavo Arnal as EVP and chief financial officer to help put its transformation plan into practice beginning this spring.
The company is also continuing to prune its workforce, which it said will garner pre-tax savings of about $97 million by the end of the year. "Decisions like these are always difficult, however, we must take the actions necessary to improve our operations and strengthen our ability to continue investing in our transformation initiatives and fuel our future growth," Zijderveld said. "I would like to express my sincere gratitude to the talented employees affected by this restructuring, and we will do our utmost to ensure everyone is treated with fairness and respect."
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