Avon Hires McKinsey to Cut U.S. Costs in Wake of 4Q Loss

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February 14, 2012 8:21 PM GMT

Avon Products Inc. (NYSE:AVP), the cosmetics maker, hired consultant McKinsey & Co. to cut costs in its American operations in the wake of a fourth-quarter loss, Bloomberg reported.

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New York-based Avon had a loss of $400,000 in the fourth quarter, down from a profit of $229.5 million in the previous year. Much of the loss stemmed from a charge of $263 million, or 38 cents per share, on its Silpada Designs Inc. division, which it acquired in 2010.

Revenue was down four percent, to $3.04 billion from $3.18 billion in the previous year, with a two percent decrease in total units sold. Analysts had forecast revenue of $3.1 billion.

During the quarter, the company decreased its number of direct sellers by three percent, and Avon is planning more layoffs this year, according to Dow Jones.

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The company is also searching for a new CEO to replace Andrea Jung, who said she would step down in December, but will remain chairman.

"While 2012 is a year of transition and we are not planning for margin recovery, our priorities are to improve top-line performance, cost management, and cash generation," said Jung in a statement on Tuesday. "As previously announced, the company is conducting an operational and financial assessment of the business. We will update investors at the appropriate time after a new CEO is on board."

Federal regulators are also investigating whether Avon broke bribery laws overseas.

Shares of Avon were up 25 cents to $17.77 in afternoon trading.

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