Avon's Nip Tuck Revamp

12 September 2006

NEW YORK: Direct sales cosmetics giant Avon is beautifying itself from the inside as it struggles to keep sales from sagging and stop profits heading south.

The company, which celebrates its 120th anniversary this week, has put in place a three-year restructuring plan to double advertising spend and focus R&D resources on product innovation to make its brands more competitive.

In addition, it will cut 900 jobs as it aims to save $300 million (€235m; £160m) a year by 2008.

The company also wants to attract and keep it most important resource - its 'Avon Ladies' who sell direct to consumers. It is looking at the earnings opportunities of its workforce in the US, Russia and Brazil.

Comments Lauren DeSanto, analyst at investment researcher Morningstar: "The model's not broken. It needs some help. They've got a great brand; they've got a product lineup that's appealing."

The greatest opportunity for Avon's growth, however, is China where it has undertaken a massive recruitment drive following the lifting of the 1998 ban on all direct sales imposed by the Chinese authorities [WAMN: 26-Jul-06].

Data sourced from USA Today.com; additional content by WARC staff