On Wednesday beauty products manufacturer and marketer Avon Products, Inc. (AVP) announced that it is going to cut 1,500 jobs globally over the next year as well as leave certain Asian markets.
The New York-based company said that it is trying to scale back and shed excess costs while also focusing on high priority markets. The elimination of jobs and the exit from South Korean and Vietnam markets is expected to result in savings of about $400 million by the end of 2015.
Avon is expected to see charges of about $80 to $90 million related to the cut backs, most of which will be used to fund severance costs.
“In order to turn around the business, we are focused on driving top-line growth and aggressively managing our cost base,” Avon CEO Sheri McCoy said in a statement. “The decisions outlined today are necessary to stabilize the company and begin the process of returning Avon to sustainable growth.”
These cutbacks come after a very poor third quarter earnings report where Avon saw profits fall by 80%. Also, a previous step in the company’s overall cost cutting plan was the slashing of its quarterly dividend by 74%, from 23 cents per share to 6 cents per share.
Avon shares were up 6 cents, or +0.41%, during morning trading on Wednesday.
The Bottom Line
Shares of Avon Products (AVP) have a 1.66% dividend yield, based on last night’s closing stock price of $14.47. The stock has technical support in the $12 price area. If the shares can firm up, we see overhead resistance around the $16-$17 price levels.
Avon Products, Inc. (AVP) is not recommended at this time, holding a Dividend.com DARS™ Rating of 2.8 out of 5 stars.
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