Avon Announces Initial Steps of Cost Savings Initiative

           Avon Announces Initial Steps of Cost Savings Initiative

PR Newswire

NEW YORK, Dec. 11, 2012

NEW YORK, Dec. 11, 2012 /PRNewswire/ --Avon Products, Inc. (NYSE: AVP) today
outlined initial steps toward the company's previously communicated annual
cost-savings target of $400 million by the end of 2015. 

Initial steps of the cost-savings initiative will include a targeted global
headcount reduction of approximately 1,500 positions and related actions. The
company also announced today that it will exit the South Korea and Vietnam
markets. 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.

Cost to implement these actions is expected to be in the range of $80-90
million before taxes, of which approximately $50-60 million is expected to be
recorded in the fourth quarter of 2012. The company anticipates that these
initial steps will account for approximately 20% of the total targeted
savings.

"In order to turn around the business, we are focused on driving top-line
growth and aggressively managing our cost base," said Sheri McCoy, Chief
Executive Officer, Avon Products, Inc. "The decisions outlined today are
necessary to stabilize the company and begin the process of returning Avon to
sustainable growth."

The company expects to communicate additional steps toward the cost-savings
goal as it progresses.

About Avon
Avon, the company for women, is a leading global beauty company, with over $11
billion in annual revenue. As the world's largest direct seller, Avon markets
to women in more than 100 countries through over 6 million active independent
Avon Sales Representatives. Avon's product line includes beauty products, as
well as fashion and home products, and features such well-recognized brand
names as Avon Color, ANEW, Skin-So-Soft, Advance Techniques, Avon Naturals,
and mark. Learn more about Avon and its products at www.avoncompany.com.

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 are
forward-looking statements within the meaning of the Private Securities
Litigation Reform Act of 1995. Words such as "estimate," "project,"
"forecast," "plan," "believe," "may," "expect," "anticipate," "intend,"
"planned," "potential," "can," "expectation" and similar expressions, or the
negative of those expressions, may identify forward-looking statements. Such
forward-looking statements are based on management's reasonable current
assumptions and expectations. 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:

  oour ability to implement the key initiatives of, and realize the gross and
    operating margins and projected benefits (in the amounts and time
    schedules we expect) from, our stabilization strategies, 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, information technology and related
    system enhancements and cash management, tax, foreign currency hedging and
    risk management strategies;
  oour ability to realize the anticipated benefits (including any financial
    projections concerning, for example, future revenue, profit, cash flow and
    operating margin increases) from our stabilization strategies, and
    multi-year restructuring programs or other initiatives on the time
    schedules or in the amounts that we expect, and our plans to invest these
    anticipated benefits ahead of future growth;
  othe possibility of business disruption in connection with our
    stabilization strategies, multi-year restructuring programs or other
    initiatives; our ability to realize sustainable growth from our
    investments in our brand and the direct-selling channel;
  oour ability to transition our business in North America, including
    enhancing our Sales Leadership model and optimizing our product portfolio;
  oa 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;
  othe effect of political, legal, tax and regulatory risks imposed on us in
    the United States and abroad, our operations or our Representatives,
    including foreign exchange or other restrictions, adoption, interpretation
    and enforcement of foreign laws, including in non-U.S. 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;
  oour ability to effectively manage inventory and implement initiatives to
    reduce inventory levels, including the potential impact on cash flows and
    obsolescence;
  oour ability to achieve growth objectives, particularly in our largest
    markets, such as the U.S., and developing and emerging markets, such as
    Brazil or Russia;
  oour ability to successfully identify new business opportunities and
    identify and analyze acquisition candidates, secure financing on favorable
    terms and negotiate and consummate acquisitions as well as to successfully
    integrate or manage any acquired business;
  othe challenges to our businesses, such as Silpada and China, including the
    effects of rising costs, macro-economic pressures, competition, any
    potential strategic decisions, and the impact of declines in expected
    future cash flows and growth rates, and a change in the discount rate used
    to determine the fair value of expected future cash flows, which have
    impacted, and may continue to impact, the estimated fair value of the
    recorded goodwill and intangible assets;
  othe 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, foreign exchange restrictions
    and the potential effect of such factors on our business, results of
    operations and financial condition;
  ogeneral economic and business conditions in our markets, including social,
    economic and political uncertainties in the international markets in our
    portfolio;
  oany 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 and
    related 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;
  okey information technology systems, process or site outages and
    disruptions;
  odisruption in our supply chain or manufacturing and distribution
    operations;
  oother 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;
  othe risk of product or ingredient shortages resulting from our
    concentration of sourcing in fewer suppliers;
  othe quality, safety and efficacy of our products;
  othe success of our research and development activities;
  oour ability to attract and retain key personnel;
  ocompetitive 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;
  oour ability to implement our Sales Leadership program globally, to
    generate Representative activity, to increase the number of consumers
    served per Representative and their engagement online, to enhance the
    Representative and consumer experience and increase Representative
    productivity through field activation programs, execution of Service Model
    Transformation and other investments 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;
  othe impact of the typically seasonal nature of our business, 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;
  oour ability to protect our intellectual property rights;
  othe risk of an adverse outcome in any material pending and future
    litigations or with respect to the legal status of Representatives;
  oour ratings, our access to cash and short and long-term financing and
    ability to secure financing, or financing at attractive rates;
  oour ability to comply with certain covenants in our debt instruments,
    including the impact of any significant non-cash impairments, significant
    currency devaluations, significant legal or regulatory settlements, or
    obtain necessary waivers from compliance with, or necessary amendments to,
    such covenants, and the impact any non-compliance may have on our ability
    to secure financing;
  othe 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; and
  othe impact of changes in tax rates on the value of our deferred tax assets
    and our ability to realize foreign tax credits in the U.S.

Additional information identifying such factors is contained in Item1A of our
2011 Form 10-K for the year ended December31, 2011. We undertake no
obligation to update any such forward-looking statements.

SOURCE Avon Products, Inc.

Website: http://www.avoncompany.com
Contact: MEDIA: Jennifer Vargas, +1-212-282-5404; or INVESTORS: Amy Chasen,
+1-212-282-5320
 
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