Avon to Keep Suffern, Rye Operations
Real Estate In-Depth | March 2016
NEW YORK—Avon Products Inc., which shed its North American operations in December, announced on March 14 that it plans to relocate its global corporate headquarters from New York City to the United Kingdom. In addition, the company stated it intends to reduce its worldwide workforce by 2,500 employees.
The headquarters move and job cuts are part of a three-year transformation plan the company outlined back in January. However, in its announcement earlier this month, Avon stated that it would maintain its current facilities in Suffern and Rye. The company will also continue to be incorporated in New York and trade on the New York Stock Exchange under the symbol AVP. The company said its move from its corporate headquarters in New York City to the United Kingdom would take place “over time.” The cosmetics firm revealed no timetable on the move from its global headquarters at 777 Third Ave. in Manhattan.
In December 2015, private equity firm Cerberus Capital Management LP, agreed to infuse $435 million into Avon and make the North American business into a separate company with another $170-million investment, according to the Wall Street Journal.
Avon in its March 14th announcement said the North American business isn’t affected by the latest cost-cutting plans. Avon maintains a minority interest in the North American business.
“Today, we are taking another important step forward in the execution of Avon’s transformation plan. With the recent completion of the sale of the North American business, our commercial operations are now fully outside of the United States, allowing us to dramatically rethink our operating model,” said Avon CEO Sheri McCoy. “The actions we are taking today will bring our corporate and commercial businesses closer together, which will drive efficiencies, improve operational effectiveness and deliver significant cost savings.”
The company expects to record total charges associated with these actions of approximately $60 million before taxes in the first quarter of 2016. These charges are expected to be comprised primarily of employee-related costs. The company expects to realize pre-tax savings of approximately $30 million in 2016 associated with an approximate 1,700-headcount reduction, and expects to achieve annualized pre-tax savings of approximately $65 million— $70 million beginning in 2017.
In addition, Avon expects to realize annualized pre-tax savings of approximately $20 million in 2016 related to the elimination of the open positions.