Avon Calling For A New Leader To Reverse Skidding Sales, Value

After five years of persistent adaptation to a world increasingly influenced by the Millennial mindset and buying patterns, the door is shutting closed on Avon CEO Sherilyn (Sheri) McCoy’s attempts to turn around what is still the global leader in direct selling of beauty products.

“Avon has lost more than $8 billion of market value under McCoy's watch,” Brooke Sutherland reports for Bloomberg and yesterday it “announced another quarterly loss and revenue that was weaker than expected.” Sales decreased 3% to $1.4 billion (4% in constant dollars).



Also, “even though improving engagement with its dwindling pack of representatives is supposed to be a key tenet of Avon's turnaround push, the number of active salespeople hawking its products dropped 3% in the quarter,” Sutherland points out. “Absent a time machine, there are no quick fixes,” she concludes under a hed that declares: “Avon Needs A Miracle Worker.”

“The announcement is the latest success for activist shareholders, who have put some of the world’s largest companies in their sights, pushing for businesses to streamline their operations, shake up their boards or revamp their strategies,” writes Chad Bray for the New York Times.

“Barington Capital Group and NuOrion Partners called on Avon Products’ board of directors earlier this year to replace Ms. McCoy as poor results weighed on its stock price. Media reports first emerged in June that Ms. McCoy, who has been the top executive at Avon since 2012, was expected to leave the company.”

“The company that became a household name through its ‘Ding Dong, Avon Calling’ jingle has been in restructuring mode for a decade. Ms. McCoy has spent her tenure trying to make Avon more relevant in a world where shopping is increasingly occurring on Amazon or through links on slick Instagram pages,” observes Anna Nicolaou for Financial Times.

“Founded in 1886 by a male bookseller in Manhattan, Avon offered employment for women decades before they were able to vote. But the company has become ‘a testament to the challenges with getting too stuck in a business model and not evolving with your customer,” says Kathy Gersch, a former Nordstrom executive and now a vice president at consultants Kotter International. ‘They’ve been hoping that their representatives figure it out on their own on social media. That’s not fast enough,’” Nicolaou continues.

McCoy told the Wall Street Journal’s Sharon Terlep and Joann S. Lublin that she had come to a mutual decision with the board. The WSJ had reported in June that she was negotiating the terms of her “retirement.”

“We got to a point where we had conversations and decided it was the right time. I am very proud of what I’ve done,” she said. 

“Ms. McCoy said she succeeded in her main goals: splitting off and selling Avon’s floundering North American unit, relocating the company to the U.K. and putting in place a new management team. ‘The board always knew I wasn’t going to stay in the U.K.,’ she said,” Terlep and Lublin write.

“I'm proud to have led Avon's team in rebuilding a culture of accountability and navigating a challenging economic and competitive environment, all while maintaining our commitment to empowering women and creating earnings opportunities for women around the world,” McCoy told analysts during the second quarter earnings call yesterday. “We've made great progress in strengthening the Avon brand through the introduction of our Beauty for a Purpose framework coupled with investment in new social media initiatives and innovative high-quality products.” 

Seeking Alpha has a transcript of the entire call here.

Avon's board has retained Heidrick & Struggles to help it find a successor. Among other achievements cited in a laudatory press release announcing the “transition,” Avon points out that “during Ms. McCoy's tenure, Avon has sustained its position as the #1 direct selling beauty company, and has risen to become the #1 Word of Mouth Beauty Brand and the #3 Beauty Brand on Facebook.”

But the world has not changed so much that the bottom line in keeping your job is not still the bottom line.

Next story loading loading..