01.10.07
Avon Products Inc. will close two of its distribution centers and build a new one as part of a restructuring of its U.S. distribution operations.
The direct seller of beauty products will close distribution branches in Newark, DE. by mid-2009, and Glenview, IL. by mid-2010, resulting in the elimination of about 620 jobs.
Avon plans to open the new distribution center at an undetermined location in the Midwest in 2009. The facility will employ about 500 people when fully operational and have the capacity to ship 50 percent of the companys U.S. sales volume. Avon expects to invest a combined $150 million in the new distribution center and in technology and equipment upgrades at other branches.
The company said it will record about $20 million of charges relating to the restructuring in the fourth quarter of 2006, and incur additional expenses of about $65 million over the next several years. Offsetting those costs, Avon sees a net gain of about $25 million from the sales of the Newark and Glenview facilities at the end of the project period. And once this restructuring is fully implemented, Avon expects to achieve annualized cost savings of about $35 million to $45 million.
Avon continues to project that the total cost to implement all of its restructuring efforts will be in the $500 million range, and that annualized restructuring savings will exceed $300 million when the plan is fully implemented.