Avon 2012 Annual Report Download - page 4

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In addition, we continued the tremendous work of
the Avon Foundation for Women and made important
contributions toward the causes we support: ending
breast cancer and preventing domestic violence.
These causes are fully aligned with our mission
of empowering women, and resonate with our
Representatives and consumers. I saw the power
of our Foundation’s work fi rsthand last fall when I
participated in the Avon Walk for Breast Cancer
in New York.
Looking to the future, we have outlined our
goals for you: mid-single-digit revenue growth,
low-double-digit operating margin, and cost
savings of $400 million by 2016. These are
aggressive, but reasonable goals. To deliver on these
goals, we have developed a strategic framework
focused on three priorities: Executing our Growth
Platforms; Driving Simplifi cation and Effi ciency;
and Improving Organizational Effectiveness.
EXECUTING OUR
GROWTH PLATFORMS
To execute our growth platforms, we are focused on
innovating the consumer proposition; transforming
the Representative experience; and optimizing
our geographies.
Innovating the consumer proposition is our lead
priority because our Representatives need great
products to sell. We are sharpening our consumer
insights to deliver relevant and local positioning.
We are creating and executing our focused category
strategies in Color, Fragrance, Skincare and Fashion
& Home. Working together, each of these categories
has a role to play in bringing a world of Beauty
home to our consumers. Aligning these global
category strategies with local consumer demands
in our key markets will signifi cantly improve the
appeal and effectiveness of our product portfolio.
We are also creating a globally consistent brand
strategy to improve brand health and to improve
access to our products.
Transforming the Representative Experience
requires keeping our Representatives at the center
of everything we do. Avon’s more than 6 million
active, independent sales Representatives are
our competitive advantage. They are the social
prioritized our product categories and are focused
on winning in Color, Fragrance, Skincare, and Fashion
& Home. We are fast-tracking mobile and social
media technologies that will help our Representatives
connect with their customers and improve their
ease of doing business with Avon.
At the same time, we have begun to reduce the
cost base, improve focus on cash management,
and improve our capital structure. Late in 2012,
we announced initial actions of our cost savings
initiative, including the exit of two markets,
realignment of our supply chain in North America,
and a headcount reduction of approximately 1,500.
Those actions, when completed, are expected to
generate approximately $70 million in annual
savings. We also made a signifi cant reduction in
the dividend, which better aligns with Avon’s current
operating performance and our peer group. While
these were not easy decisions to make, they are
critical to restoring Avon’s fi nancial health. And, we
began efforts to improve our capital structure with
the goal of extending our debt maturity profi le and
improving our fi nancial fl exibility.
I am very con dent
that we will return
Avon to growth. We have
more than six million
active, independent Avon
Representatives who believe
in Avon and want us to
succeed. We have an enviable
geographic footprint and
an enduring brand.
“
“