Avon 2014 Annual Report Download - page 16

PART I
• execute investments in information technology infrastructure and realize efficiencies across our supply chain, marketing processes, sales
model and organizational structure;
• implement customer service initiatives;
• implement and continue to innovate our Internet platform and technology strategies;
• offer a more compelling social selling experience, including the roll-out of e-commerce in certain markets;
• effectively manage our outsourcing activities;
• improve our marketing and advertising, including our brochures and our social media presence;
• improve working capital, effectively manage inventory and implement initiatives to reduce inventory levels, including the potential impact
on cash flows and obsolescence;
• secure financing at attractive rates, maintain appropriate capital investment, capital structure and cash flow levels to fund, among other
things, cash dividends, and implement cash management, tax, foreign currency hedging and risk management strategies;
• reverse declines in Active Representatives and Representative satisfaction by successfully reducing campaign complexity, enhancing our
sales Leadership program, the Representative experience and earnings potential and improving our brand image;
• increase the productivity of Representatives through successful implementation of field activation programs and technology tools and
enablers and other investments in the direct-selling channel;
• improve management of our businesses in developing markets, including improving local information technology resources and
management of local supply chains;
• increase the number of consumers served per Representative and their engagement online, as well as to reach new consumers through a
combination of new brands, new businesses, new channels and pursuit of strategic opportunities such as acquisitions, joint ventures and
alliances with other companies;
• comply with certain covenants in our revolving credit facility as a result of a continued decline in our business results, which includes the
impact of any adverse foreign exchange movements, significant restructuring charges and significant legal or regulatory settlements,
obtain necessary waivers from compliance with, or necessary amendments to, such covenants, and address the impact any non-
compliance with such covenants may have on our ability to secure financing with favorable terms; and
• estimate and achieve any financial projections concerning, for example, future revenue, profit, cash flow, and operating margin increases.
There can be no assurance if and when any of these initiatives will be successfully and fully executed or completed.
We may experience financial and strategic difficulties and delays or unexpected costs in
completing our various restructuring and cost-savings initiatives, including achieving any
anticipated savings and benefits of these initiatives.
In 2012, we outlined initial steps toward achieving a cost-savings target of $400 before taxes by the end of 2015. In connection with this
cost-savings target, in 2012, we announced a cost savings initiative (the “$400M Cost Savings Initiative”), in an effort to stabilize the
business and return Avon to sustainable growth. While we have achieved the targeted cost savings, we have not yet achieved our targeted
low double-digit operating margin primarily due to the unfavorable impact of foreign exchange, inflationary pressures and continued
revenue decline in North America. We continue to analyze our cost structure and may incur additional restructuring charges in an effort to
achieve our targeted low double-digit operating margin. As we work to right-size our cost structure, we may not realize anticipated savings
or benefits from one or more of the various restructuring and cost-savings initiatives we may undertake as part of these efforts in full or in
part or within the time periods we expect. Other events and circumstances, such as financial and strategic difficulties and delays or
unexpected costs, including the impact of foreign currency and inflationary pressures, may occur which could result in our not realizing our
targeted low double-digit operating margin. If we are unable to realize these savings or benefits, our ability to continue to fund other
initiatives and aspects of our business may be adversely affected. In addition, any 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 risks of labor
unrest, negative publicity and business disruption in connection with our restructuring and other cost-savings initiatives, and the failure to
realize anticipated savings or benefits from such initiatives could have a material adverse effect on our business, prospects, financial
condition, liquidity, results of operations and cash flows.
There can be no assurance that we will be able to reverse declining revenue, margins and net
income and achieve profitable growth.
There can be no assurance that we will be able to reverse declining revenue, margins and net income, particularly in North America where
we experienced continued revenue declines in 2014, and to achieve profitable growth in the future, particularly in our largest markets, such