December 11, 2013 / 4:03 PM / 5 years ago

Avon to stop order management technology roll-out; cuts 650 jobs

The Avon Products headquarters is seen in midtown Manhattan area of New York, June 21, 2013. REUTERS/Brendan McDermid

(Reuters) - Avon Products Inc (AVP.N), the world’s largest direct seller of cosmetics, said it will halt the further roll-out of its order management technology and cut about 650 jobs.

The company’s shares fell 5 percent in early trade.

Avon, which has been struggling with declining sales, launched the technology in 2009 to improve interaction with its sales representatives.

However, sales in Canada fell in the company’s most recent quarter due to disruption caused by the technology, known as service model transformation project.

The company, which said in April it would slash 400 jobs, had 39,100 employees as of December 31, 2012.

Avon expects to record a pretax non-cash charge of about $100 million-$125 million in the fourth quarter of 2013, reflecting the writedown of capitalized software, the company said in a regulatory filing on Wednesday.

The company also expects to record about $35 million-$45 million in charges before taxes, mainly related to the job cuts. Avon said it expects to record about $35 million of the charges in the fourth quarter of 2013 and the remainder before the end of 2014.

The company said it expects to realize annualized savings of about $40 million-$45 million before taxes from the job cuts.

Avon shares were down 4 percent at $17.05 on the New York Stock Exchange in morning trade.

Reporting by Maria Ajit Thomas in Bangalore; Editing by Sriraj Kalluvila

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