Avon 2009 Annual Report Download - page 26

PART I
•implement our Sales Leadership program globally, recruit
Representatives, enhance the Representative experience and
increase their productivity through investments in the
direct-selling channel;
•increase the number of consumers served per Representative
and their engagement online, as well as to reach new con-
sumers through acombination of new brands, new businesses,
new channels and pursuit of strategic opportunities such as
acquisitions, joint ventures and strategic alliances with other
companies; and
•estimate and achieve any projections concerning future
revenue and operating margin increases.
There can be no assurance that any of these initiatives will be
successfully and fully executed in the amounts or within the time
periods that we expect.
We may experience difficulties, delays or
unexpected costs in completing our multi-
year turnaround plan, including achieving
the anticipated savings of our multi-year
restructuring initiatives.
In November 2005, we announced amulti-year turnaround plan
as part of amajor drive to fuel revenue growth and expand
profit margins, while increasing consumer investments. Restruc-
turing initiatives that are part of the turnaround plan include:
enhancement of organizational effectiveness, implementation
of aglobal manufacturing strategy through facilities realign-
ment, additional supply chain efficiencies in the areas of pro-
curement and distribution and streamlining of transactional and
other services through outsourcing and moves to low-cost coun-
tries. As part of the turnaround plan, we also launched our PLS
program and SSI initiative. In February 2009, we announced a
new restructuring program under our multi-year turnaround plan,
which focuses on restructuring our global supply chain opera-
tions, realigning certain local business support functions to a
more regional basis to drive increased efficiencies, and streamlin-
ing transaction-related services, including selective outsourcing.
We may not realize, in full or in part, the anticipated savings or
benefits from one or more of these initiatives, and other events
and circumstances, such as difficulties, delays or unexpected
costs, may occur which could result in our not realizing all or any
of the anticipated savings or benefits. If we are unable to realize
these savings or benefits, our ability to continue to fund planned
advertising, market intelligence, consumer research and product
innovation initiatives may be adversely affected. In addition, our
plans to invest these savings and benefits ahead of future
growth means that such costs will be incurred whether or not
we realize these savings and benefits.
We are also subject to the risk of business disruption in connec-
tion with our multi-year restructuring programs or other strategic
initiatives, which could have amaterial adverse effect on our
business, financial condition and operating results.
There can be no assurance that we will be
able to achieve our growth objectives or
maintain rates of growth.
There can be no assurance that we will be able to achieve profit-
able growth in the future or maintain rates of growth. In devel-
oped markets, such as the U.S., we seek to achieve growth in
line with that of the overall beauty market, while in developing
and emerging markets, such as Brazil, we have higher growth
targets. Our growth overall is also subject to the strengths and
weakness of our individual markets, including our international
markets, which are or may be impacted by global economic
conditions. We cannot assure that our broad-based geographic
portfolio will be able to withstand an economic downturn or
recession in one or more particular regions. Our ability to
increase or maintain revenue and earnings depends on numer-
ous factors, and there can be no assurance that our current or
future business strategies will lead us to achieve our growth
objectives or maintain our rates of growth.
Our business is conducted worldwide
primarily in one channel, direct selling.
Our business is conducted worldwide, primarily in the direct-
selling channel. Sales are made to the ultimate consumer prin-
cipally through approximately 6.2 million active independent
Representatives worldwide. There is ahigh rate of turnover
amongRepresentatives, which is acommon characteristic of
the direct-selling business. As aresult, in order to maintain our
business and grow our business in thefuture, we need to
recruit,retain and service Representatives on acontinuing basis
and continue to innovatethe direct-selling model. If consumers
changetheir purchasing habits, such as by reducing purchases
of beauty and related products generally, or by reducing
purchases from Representatives or buying beauty and related
products in channels other than in direct selling, this could
reduce oursales and have amaterial adverse effect on our
business, financial condition and results of operations. If our
competitorsestablish greater market share in thedirect-selling
channel, our business,financial condition and operating results
may be adversely affected. Furthermore, if any government
bans or severely restricts our business method of direct selling,
our business, financial condition and operating results maybe
adversely affected.