Avon Will Go Ahead With Move to the U.K. Despite Brexit Voteby
Cosmetics company says it’s ‘business as usual’ in Britain
Shares of Avon plunge on Friday as referendum roils markets
Avon Products said Britain’s vote to leave the European Union won’t change management’s plan to move its headquarters to the U.K.
The cosmetics company, which split off its North American operations in March, expects to complete its relocation to Britain from New York by the end of the year, according to an e-mailed statement.
“Avon operates in many markets around the world with diverse political and economic structures, and our business model is able to adapt to local circumstances,” Avon said in the statement on Friday. “It’s business as usual for Avon in the U.K. today, and our priorities do not change.”
The U.K.’s vote to leave the European Union -- a movement known as Brexit -- roiled global markets on Friday, and Avon was hit hard. The company’s shares dropped as much as 12 percent to $3.75 in New York trading, their biggest intraday decline in more than four months.
Avon announced the relocation plan in March after splitting off its North American operations. The move is part of a cost-cutting push that includes eliminating about 2,500 jobs.
The plan, which will save as much as $70 million by 2017, is supposed to have tax benefits for the company, reduce corporate infrastructure and put it near customers in Europe, the company has said.
Avon offloaded its domestic operations in a deal with private equity firm Cerberus Capital Management LP following four straight years of declining sales. Cerberus acquired majority control of the North American business, letting Avon shift its focus overseas, where door-to-door cosmetics sales have bigger growth potential.
Other consumer stocks with exposure to Europe also tumbled on Friday. Fossil Group Inc. dropped as much as 8.3 percent, while Ralph Lauren Corp. fell more than 7 percent.