Following the recent news of door to door beauty brand Avon’s $167 million loss in the first quarter of 2014, it is not shocking news that the brand are making some changes.
Although Avon already laid-off 650 people in December, the brand announced Monday that it plans to lay-off another 600 employees in an effort to turn around the business’ devastating losses. The cutbacks will be primarily from the corporate side of the business and its North American business unit.
Avon have projected that these measures are expected to save them $50 – $55 million a year, with the brand hoping to save $400 million by 2016.
Although cut-backs are always controversial, for the brand the 600 are not much of a dent to the workforce. Six hundred makes up less than 2% of the brands employees and this is excluding sales reps of which the company still boasts more than 6 million sales representatives (‘Avon Ladies’) around the world.
Avon faced further controversy earlier this year due to allegations that it had paid bribes to China and other countries. It also appeats that these new markets such as Asia that are being tapped in to to grow the brand are also part of the problem, as they are not as successful as the original US market.
However even in the US Avon are facing tough competition as despite the familiarity and history of the brand, new beauty brands such as Sephora are growing rapidly and taking Avon’s old share of the market.
Despite losses and tough competition, it seems that the brand isn’t dead yet and perhaps these cutbacks will be exactly what they need to dominate the beauty market once again.
