Avon CEO to Step Down
Avon CEO Sheri McCoy is leaving the company in March after five years as the struggling beauty products maker continues its turnaround as external pressure from activist investors for a change in leadership continues to mount.
An executive search firm has been hired to help look for McCoy’s successor, Avon announced Thursday.
“The platform is in place for a new CEO to continue accelerating the pace of change and take Avon to sustainable profitable growth,” McCoy announced.
Barrington Capital Group had been demanding for notable action from Avon since 2015. At one point, the group sent a letter to the cosmetics company saying that, “significant, immediate changes in leadership and strategic direction are needed.”
Avon announced that it was cutting 2,500 jobs in March of 2016.
The company started a three-year transformation plan in 2016 and it has sold its North American business to Cerberus Capital Management, a private investment firm, and gained $180 million in cost savings from it but those efforts have been difficult to say the least.
On Thursday, the company suffered a surprise loss of up to $45.5 million on the second quarter of this year.
Shopping habits have changed dramatically pushing the famous American brand that started back in 1886, to move its headquarters from New York to the U.K. this past year.
Sales have been on a downward spiral every year since 2012, and went down to 8 percent in 2016. “Avon Ladies” have also gone down every quarter.
The company has been plagued by software problems, a commission system, and a delayed introduction to e-commerce putting it behind its competitors.
Industry analysts did not foresee the many signs of the turnaround effort that is now underway.
Mark Astrachan, an analyst with Stifel Nicolaus wrote: “Overall we believe challenges are accelerating, with visibility lacking. We believe Avon continues to lose share and consumer relevance in a number of key markets, increasing the difficulty in achieving a sustainable improvement in sales growth and operating margin, particularly given worsening sales trends while reinvestment increases.”
Shares suffered a 10 percent slump in midday trading Thursday to trade almost three-year lows.