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Avon announces loss, 'immediate' layoffs

Lucas Jackson / Reuters

Andrea Jung, CEO of Avon Products.

By msnbc.com news services

Updated at 6:38 p.m. ET. to reflect that company's salespeople are independent contractors and scope of layoffs.

Cosmetics giant Avon Products reported a fourth-quarter net loss Tuesday amid declining sales and rising commodity costs. Chief Executive Officer Andrea Jung said the company doesn’t expect its margins -- the revenue the company keeps after paying its costs -- to improve this year.

The downbeat forecast comes amid a Bloomberg News report that says the company is planning to restructure its global operations with the help of consulting firm McKinsey. On a conference call with investors Tuesday, executives said they see “immediate” potential savings through reducing headcount.

The company's independent salespeople, who number some 6.5 million according to the company's website, will not be affected,  Avon spokersperson Jennifer Vargas said.

The company markets to women in 100 countries.

Once a thriving cosmetics company, Avon is now seeking to right the ship of its sinking operations after years of tepid earnings and declining profit.

In December it announced the departure of longtime chief executive Jung as soon as a replacement could be found. Additionally, Avon has been hurt by an internal bribery investigation that began in China, and its stock has come under pressure over the past year because of the company’s poor performance in countries like Brazil.

Shares of Avon have declined some 60 percent since hitting a high in 2004.

Bloomberg News reports that a company overhaul will include cutting costs in Avon’s North American unit, where sales have dropped every year since 2007 and slid about 7 percent in the third quarter.

Bloomberg interviewed one analyst who was skeptical of the plan's potential success.

“This is a rudderless ship right now, and trying to turn it massively may not get you anywhere,” said Ali Dibadj, an analyst at Sanford C. Bernstein in New York. “The problem with Avon isn’t that it needs a restructuring, it’s that it has been in perpetual restructuring, literally for the past 15 years.”

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