Avon plans to cut 1,500 jobs

Avon, the troubled cosmetics group, is to cut 1,500 jobs and pull out of South Korea and Vietnam under a cost-cutting plan designed to revive its fortunes.

Sheri McCoy, chief executive, announced the moves yesterday as the first specific elements of a previously announced plan to cut costs by $400m.

Its shares slipped 0.5 per cent to $14.40 in New York.

The company said that the job cuts and withdrawal from the two Asian markets would account for about 20 per cent of the $400m it wants to save. Ms McCoy, who joined the group in April, was hired to turn it round after years in which Avon was dogged by legal and operational woes and falling sales and profits.

Erin Lash, analyst at Morningstar, said: “Overall Avon isn’t new to the restructuring game, but this time around management does seem very intent on more surgically reducing costs. In the past it was more large-scale programmes aimed at taking out a large swath.”

Avon said: “These actions are aimed at concentrating resources on high priority markets and activities and boosting efficiencies and are expected to be largely completed before the end of 2013.”

Avon’s growth has faltered in key countries including Brazil and Russia.

“It’s no surprise that they would look to focus on their largest markets,” said Ms Lash.

Avon said implementing the job cuts and market retreats would cost between $80m and $90m, with $50m to $60m of that likely to be recorded in the fourth quarter of 2012.

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