Avon Products : Revises Management Structure in Support of Turnaround Plan

NEW YORK , Nov. 18, 2014 /PRNewswire/ -- Avon Products, Inc. (NYSE: AVP) today announced a series of changes to the company's management structure designed to support its multiyear turnaround plan.

"To return the Avon business to sustainable, profitable growth, we continue to improve processes, reduce cost, and invest in our top markets," said Sheri McCoy , Chief Executive Officer of Avon Products, Inc.

Avon's Latin America management responsibilities will be divided between two Avon executives who will each oversee a defined set of markets within the region. David Legher, currently Senior Vice President and President of Avon Brazil, will assume additional responsibility for the South Market Group*. Mr. Legher will report directly to Ms. McCoy and join Avon's Executive Committee. Fernando Acosta , currently Senior Vice President and President, Latin America , will retain responsibility for North Latin America and the Andean Cluster**.

"Latin America is our largest region representing more than half of our annual revenue. Driving growth in our Latin American markets is a top priority for Avon , and adjusting the business management responsibilities between two seasoned Avon executives will allow for better management focus and sustained growth," said Ms. McCoy. "David has a deep knowledge of the Avon business, particularly in Latin America , and he will add a strong market perspective to the Executive Committee."

Mr. Legher is a 13-year veteran of Avon having held positions of increasing responsibility throughout Avon Latin America, leading up to management of the company's largest market, Avon Brazil. Mr. Legher will maintain his responsibility for the Brazilian market.  

This change will not impact Avon's financial reporting structure.

To accelerate the pace of improvement in its two core processes of commercial marketing and field management, Avon also announced changes in the marketing organization and increased support of the sales organizations in its key markets.

Mr. Acosta, in addition to his management responsibilities in North Latin America and the Andean Cluster, will take on additional responsibility as Avon's Head of Global Brand Marketing. In this role, he will lead all global marketing activities, including brand, product category strategy, and research & development. He continues to report to Ms. McCoy and serve on the company's Executive Committee. 

Mr. Acosta has led Avon's Latin America region for more than three years. Prior to joining Avon , he spent 19 years at Unilever where he advanced through a series of senior marketing and operating positions for some of Unilever's most prominent brands.

"We've made progress on both brand and product category management over the past two years, and this next step will allow us to continue our work to elevate the Avon brand and better innovate and invest in our top markets," said Ms. McCoy. "Fernando has a unique combination of expertise in both business operations and global brand management that will serve us well in successfully activating on the local level across all geographies."

Patricia Perez-Ayala , currently, Senior Vice President, Chief Marketing Officer, and Global Brand & Category President, will be leaving Avon effective January 2 , 2015. 

John Higson , currently Senior Vice President & President, Europe , Middle East , Africa (EMEA), will take on an expanded role as Head of Global Field Operations. In this capacity, he will provide assessment and advisory support to the sales teams in Avon's top 12 markets, aiming to accelerate the onboarding for Sales Heads new to their role and improve the Avon pipeline to ensure more "ready now" successors for key field management assignments. Mr. Higson will maintain responsibility for the Avon EMEA business unit. He continues to report to Ms. McCoy and serve on the company's Executive Committee.

"John's expanded management role will allow for more direct engagement with our field sales operations globally, and will help us to identify and remediate any potential field issues," said Ms. McCoy. "Having someone with John's depth of experience in this role will provide a consistent lens for our ongoing efforts to innovate our social selling model."

During his 29-year career at Avon , Mr. Higson has held a variety of sales, strategy and general management assignments.

The Company also announced additional actions relating to its previously disclosed $400 million cost savings initiative. These actions primarily consist of initiatives relating to improving supply chain efficiencies, including contract terminations, as well as global headcount reductions, and are expected to result in annualized pre-tax savings of approximately $40 million . Total pre-tax charges to be recorded as a result of these actions are expected to be approximately $45 million , with approximately $30 to $35 million expected to be recorded in the fourth quarter of 2014.

Avon , the company for women, is a leading global beauty company, with $10 billion in annual revenue. As one of the world's largest direct sellers, Avon is sold through more than 6 million active independent Avon Sales Representatives. Avon products are available in over 100 countries, and the product line includes color cosmetics, skincare, fragrance, and fashion and home products, featuring such well-recognized brand names as Avon Color, ANEW, Skin-So-Soft, Advance Techniques, and mark. Learn more about Avon and its products at www.avoncompany.com.

*The South Market Group includes Argentina , Chile , and Uruguay .
** North Latin America includes Mexico , El Salvador , Guatemala , Honduras , Nicaragua , Panama , and   Dominican Republic . The Andean Cluster is comprised of Colombia , Peru , Ecuador , and Venezuela .

CAUTIONARY STATEMENT FOR PURPOSES OF THE "SAFE HARBOR" STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995

Statements in this release that are not historical facts or information may be forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Words such as "expect," "will" and similar expressions, or the negative of those expressions, may identify forward-looking statements. They include, among other things, statements regarding our anticipated or expected results, future financial performance, various strategies and initiatives (including our stabilization strategies, cost savings initiatives, multi-year restructuring programs and other initiatives and related actions), and costs and cost savings. Such forward-looking statements are based on management's reasonable current assumptions, expectations, plans and forecasts regarding the Company's current or future results and future business and economic conditions more generally. Such forward-looking statements involve risks, uncertainties and other factors, which may cause the actual results, levels of activity, performance or achievement of Avon to be materially different from any future results expressed or implied by such forward-looking statements, and there can be no assurance that actual results will not differ materially from management's expectations. Such factors include, among others, the following:

• our ability to improve our financial and operational performance and execute fully our global business strategy, including our ability to implement the key initiatives of, and realize the projected benefits (in the amounts and time schedules we expect) from, our stabilization strategies, cost savings initiatives, multi-year restructuring programs and other initiatives, product mix and pricing strategies, enterprise resource planning, customer service initiatives, sales and operation planning process, outsourcing strategies, Internet platform and technology strategies including e-commerce, marketing and advertising strategies, information technology and related system enhancements and cash management, tax, foreign currency hedging and risk management strategies, and any plans to invest these projected benefits ahead of future growth;
• the possibility of business disruption in connection with our stabilization strategies, cost savings initiatives, multi-year restructuring programs, or other initiatives;
• our ability to reverse declining revenue, margins and net income, particularly in North America , and to achieve profitable growth, particularly in our largest markets, such as Brazil , and developing and emerging markets, such as Mexico and Russia ;
• our ability to improve working capital and effectively manage doubtful accounts and inventory and implement initiatives to reduce inventory levels, including the potential impact on cash flows and obsolescence;
• our ability to reverse declines in Active Representatives, to enhance our sales Leadership programs, to generate Representative activity, to increase the number of consumers served per Representative and their engagement online, to enhance branding and the Representative and consumer experience and increase Representative productivity through field activation programs and technology tools and enablers, to invest in the direct-selling channel, and to compete with other direct-selling organizations to recruit, retain and service Representatives and to continue to innovate the direct-selling model;
• general economic and business conditions in our markets, including social, economic and political uncertainties in the international markets in our portfolio, such as in Russia and Ukraine , and any potential sanctions, restrictions or responses to such conditions imposed by other markets in which we operate;
• the effect of economic factors, including inflation and fluctuations in interest rates and currency exchange rates, as well as the designation of Venezuela as a highly inflationary economy and the devaluation of its currency, the availability of various foreign exchange systems including limited access to SICAD II in Venezuela , foreign exchange restrictions, particularly currency restrictions in Venezuela and Argentina , and the potential effect of such factors on our business, results of operations and financial condition;
• any developments in or consequences of investigations and compliance reviews, and any litigation related thereto, including the ongoing investigations and compliance reviews of Foreign Corrupt Practices Act ("FCPA") and related United States ("U.S.") and foreign law matters in China and additional countries, as well as any disruption or adverse consequences resulting from such investigations, reviews, related actions or litigation, including our ability to finalize settlements with the United States Securities and Exchange Commission ("SEC") and the United States Department of Justice ("DOJ") with regard to the ongoing FCPA investigations on terms consistent with our current understandings with the government or, if we are able to reach such final settlements, what the timing of such final settlements will be or whether the SEC settlement will be authorized by the Commission or whether each of the settlements will receive the necessary court approvals, or if we are unable to reach such final settlements, the outcome of any subsequent litigation with the government which could have a material adverse effect;
• a general economic downturn, a recession globally or in one or more of our geographic regions, or sudden disruption in business conditions, and the ability of our broad-based geographic portfolio to withstand an economic downturn, recession, cost inflation, commodity cost pressures, economic or political instability, competitive or other market pressures or conditions;
• the effect of political, legal, tax and regulatory risks imposed on us in the U.S. and abroad, our operations or our Representatives, including foreign exchange, pricing, data privacy or other restrictions, the adoption, interpretation and enforcement of foreign laws, including in jurisdictions such as Brazil , Russia , Venezuela and Argentina , and any changes thereto, as well as reviews and investigations by government regulators that have occurred or may occur from time to time, including, for example, local regulatory scrutiny in China ;
• the impact of changes in tax rates on the value of our deferred tax assets, and declining earnings, including the amount of any domestic source loss and the type, jurisdiction and timing of any foreign source income, on our ability to realize foreign tax credits in the U.S.;
• competitive uncertainties in our markets, including competition from companies in the cosmetics, fragrances, skincare and toiletries industry, some of which are larger than we are and have greater resources;
• the impact of the adverse effect of rising energy, commodity and raw material prices, changes in market trends, purchasing habits of our consumers and changes in consumer preferences, particularly given the global nature of our business and the conduct of our business in primarily one channel;
• our ability to attract and retain key personnel;
• other sudden disruption in business operations beyond our control as a result of events such as acts of terrorism or war, natural disasters, pandemic situations, large-scale power outages and similar events;
• key information technology systems, process or site outages and disruptions, and any cyber security breaches, including any security breach of our systems or those of a third-party provider that results in the theft, transfer or unauthorized disclosure of customer, employee or company information or compliance with information security and privacy laws and regulations in the event of such an incident which could disrupt business operations, result in the loss of critical and confidential information, and adversely impact our reputation and results of operations, and related costs to address such malicious intentional acts and to implement adequate preventative measures against cyber security breaches;
• the risk of product or ingredient shortages resulting from our concentration of sourcing in fewer suppliers;
• the impact of any significant restructuring charges or significant legal or regulatory settlements on our ability to comply with certain covenants in our debt instruments;
• any changes to our credit ratings and the impact of such changes on our financing costs, rates, terms, debt service obligations, access to lending sources and working capital needs;
• the impact of our indebtedness, our access to cash and financing, and our ability to secure financing or financing at attractive rates;
• the impact of possible pension funding obligations, increased pension expense and any changes in pension regulations or interpretations thereof on our cash flow and results of operations;
• our ability to successfully identify new business opportunities, strategic alliances and strategic alternatives and identify and analyze alliance and acquisition candidates, secure financing on favorable terms and negotiate and consummate alliances and acquisitions, as well as to successfully integrate or manage any acquired business;
• disruption in our supply chain or manufacturing and distribution operations;
• the quality, safety and efficacy of our products;
• the success of our research and development activities;
• our ability to protect our intellectual property rights; and
• the risk of an adverse outcome in any material pending and future litigation or with respect to the legal status of Representatives.

Additional information identifying such factors is contained in Item 1A of our 2013 Form 10-K, as updated by our Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2014 , and other reports and documents we file with the SEC. We undertake no obligation to update any such forward-looking statements.

SOURCE Avon Products, Inc.