Avon cuts taking a little off the top

Avon catalogs

TEXT OF STORY

Lisa Napoli: The Avon lady came calling on Monday and she was not bearing Skin So Soft. She had news of layoffs. Marketplace's Jill Barshay reports on restructuring at the cosmetics giant.


Jill Barshay: No, the Avon lady is not getting pink-slipped. Justin Hott, managing director at Bear Stearns, says Avon is making cuts at the top.

Justin Hott: They're trying to eliminate levels of management, you don't need over a dozen levels of management.

The company is also relocating call centers to cheaper countries, where Avon's future customers are. Market research firm TNS says Chinese women will buy $3.8 billion dollars worth of cosmetics in 2009.

China ended a ban on direct sales last year. Since then Avon has recruited more than 650,000 Avon ladies there — 45,000 women a month are signing up.

Hott: They're selling a model where not only you're buying cosmetics, but you're building your own little mini business there and that is a very attractive thing to China.

Some investors don't like Avon because it's still in the midst of a $500 million makeover.

Others seem to think the Avon lady's cleaning up pretty well. The stock's up 33 percent in the last year.

In New York, I'm Jill Barshay for Marketplace.

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