Ding Dong! "Avon Calling..." As one of the world's first global cosmetics companies, Avon established itself as a household name in the 1950s and 1960s with a worldwide network of door-to-door salesladies. More recently the company was overtaken in sales by the likes of L'Oreal, but the Avon organisation remains one of the world's largest direct sellers of cosmetics products with local operations in 60 countries and distribution in more than another 40. A new management team installed in 1999 successfully dragged the company's image upmarket after years of decline, with the result that sales and profits boomed in the first half of the 2000s. Mid-decade, though, performance began to slow dramatically, with recessionary forces dragging down sales in developed markets. The group continued to develop in newer economies like Brazil and Central & Eastern Europe, but was plagued by accounting problems and allegations of bribery. In 2012, Avon rebuffed a $10.7bn takeover bid from Coty. Yet three years later, that earlier self-confidence appeared misplaced. Following a steep decline in US sales, Avon launched a strategic review of its business, leading to the sale of its North American business to private equity investor Cerberus.
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Adbrands Weekly Update 8th Feb 2018: Sheri McCoy stepped down as CEO of Avon Products after a difficult five years in which the company's share price has steadily declined, despite the spin-off of the brand's struggling US division as a separate company. McCoy is succeeded by Jan Zijderveld, previously president of Unilever's Europe division.
Adbrands Weekly Update 18th May 2017: Ads of the Week: "Overpromises". Top marks to Avon and to agency Santo for skewering all those ridiculous promises offered by mainstream beauty manufacturers. This is a deliciously sharp parody of every cosmetics ad you've ever seen. How surprising that it comes from what we might previously have regarded as tired old Avon. Perhaps this marks the new rejuvenation of that slimmed-down company.
Adbrands Weekly Update 17th Mar 2016: Avon announced plans to transfer its corporate HQ away from the US following the sale of its North American business to private equity investor Cerberus. That business now operates as an independent licensee of the Avon brand. With no remaining commercial operations of its own in the US, the main Avon company will move its corporate base to the UK, although it will remain a US company for tax purposes.
Adbrands Weekly Update 7th Jan 2016: As had been expected, troubled beauty direct seller Avon Products agreed to surrender its North American operations to private equity firm Cerberus Capital. The US and Canadian business will be spun off into a separate private company for $170m; at the same time Cerberus will acquire a 17% stake in Avon's remaining international operations for $435m. "Today marks a pivotal moment for Avon," said CEO Sheri McCoy. "This strategic partnership will allow us to drive an enhanced focus on our international markets, enable revitalization of our North American business and deliver value to our shareholders." Analysts had mixed feelings about the deal. At least one said he was "astonished" that McCoy was staying on as CEO, and said the $170m price tag for North America was a "fire sale" rate for a business with sales of around $1bn a year.
Adbrands Weekly Update 10th Dec 2015: Private equity investors are battling with one another to exert their influence on struggling beauty direct seller Avon. An activist group led by Barington Capital has already acquired a small stake in the business, and is arguing for the appointment of a new CEO to replace Sherilyn McCoy as well as a new board of directors and a rigorous cost-cutting strategy. It is also requesting that Avon put on hold talks with rival Cerberus Capital, which is said to be negotiating the buyout of Avon's troubled North America division and the purchase of a large minority stake in the remaining international operations. Avon's stock has been in steep decline since it rejected a buyout by Coty three years ago. That deal would have valued Avon at $11bn. This year, the group's value slipped to a low of $1.5bn, although the share price has recovered slightly in the wake of these rescue talks. Another rumour circulating for a few days was that TV personality Oprah Winfrey was considering the purchase of a large stake in the business. That story was quickly denied by Oprah's media spokesman.
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