Not only is Avon trying to update its direct-sales model for the digital age, balance its global business and wrap up a costly bribery investigation, the outgoing ceo, Andrea Jung, is becoming executive chairman. McCoy will report directly to the company’s board when she takes the reins in two weeks. Many see Jung’s role as unclear and awkward given that McCoy is expected to dramatically overhaul the company that Jung has led as ceo since 1999.
Avon is also fending off the unwanted advances of Coty Inc., which last week made a tentative offer to acquire the company for $10 billion. The presence of a permanent ceo could put Avon on a steadier footing as it deals with Coty, although analysts are not discounting the possibility of a higher bid that could force Avon to consider a buyout more seriously.
Investors seemed to think the appointment of McCoy made a Coty deal less likely and pushed shares of Avon down 3.1 percent to $22.69 — back below Coty’s offer of $23.25 a share.
McCoy, 53, is a 30-year Johnson’s veteran who had been seen as a contender for the corner office at the consumer products giant, a job that went to Alex Gorsky in February. She holds four patents and has a bachelor’s degree in textile chemistry from the University of Massachusetts as well as a masters in chemical engineering from Princeton University and an MBA from Rutgers University. Starting as a scientist in Johnson’s research and development organization, McCoy rose to become vice chairman of the firm’s pharmaceutical, consumer, corporate office of science and technology and information technology divisions. She was responsible for more than 60 percent of the firm’s $65 billion in revenues and oversaw brands including Neutrogena, Aveeno, Lubriderm, Clean & Clear and ROC.
“Sheri has a unique combination of strategic and finely-honed operational skills, a significant turnaround track record, global experience and people leadership,” said Fred Hassan, lead director of Avon’s board.
McCoy, who will also join Avon’s board, described the company as having a strong brand and “so much clear potential.”
“Avon has an unparalleled global direct-selling sales force of over 6 million representatives and an enviable geographic footprint,” she said. “I look forward to working with the team to develop and execute a road map to achieve the next phase of growth for the company.”
Avon was said to be looking for either a leader with experience in the direct-selling industry or a turnaround specialist. The board obviously opted for the latter.
“She took charge of the pharmaceutical business when it was as sick as could be and without experience in that industry she went in as the head of the whole thing and made tough choices in people, streamlined the costs and got the pipeline looking as good as it’s looked in 20 years,” said one person who has worked with McCoy, who requested anonymity. “She’s gifted at challenging the status quo. Coty was making a smart opportunity play on what appeared to be a gigantic company that was hugely vulnerable. The game changes dramatically in Avon’s favor when they actually have someone who is as qualified as Sheri to run the company.”
As for potential conflict with Jung, this person speculated that the board made McCoy the right kind of promises and that there wouldn’t be any confusion as to who would be running Avon.
The board could also step in if there were any problems.
“Since she’s reporting to the board of directors, it becomes the board’s responsibility to provide the freedom she needs to lead,” said Les Berglass, founder of Berglass + Associates executive search firm.
The executive-wing drama, aside, there is lots of work to be done at Avon.
Lauren DeSanto, an analyst at Morningstar, said of McCoy, “There is no cape flowing behind her, and at this point Avon’s problems are so numerous we think superhuman powers may be needed to fix them. With the possible exception of when Meg Whitman joined Hewlett-Packard, we can’t think of a new ceo appointment in recent memory where the incoming candidate had to face such a full plate of issues.”
And the takeover issue is still on the table.
“I don’t think it stops Coty if they really were serious,” DeSanto added. “I think they are serious....They just need to go higher. Coty wants Avon because they want entry into Brazil. Avon gets what out of this? That’s a little less clear.”
Those who know McCoy said she’s up to the challenge.
“She will be a definite improvement at Avon, and despite the fact that things are heating up, she can handle it — anything they throw at her,” said Jeff Nugent, founder, president and ceo of Precision Dermatology, who worked with McCoy when he was president and ceo of Neutrogena.
In her hometown of Skillman, N.J., McCoy is more known for her support of local associations than her high-powered job at Johnson’s. She was often seen in the stands last year supporting her youngest son, a basketball star now playing in college, and she is a vice president of the Montgomery Township Education Foundation, a nonprofit organization that supports programs for the high school.
Industry experts said she can understand and connect with Avon’s all-important sales representatives, while also having the professional experience to pilot the company through turbulent times. “She sounds refreshing [to the industry],” said consultant Allan Mottus. This isn’t the first time a beauty behemoth tapped a Johnson’s executive, said Mottus, who noted that chief marketing officers at Estée Lauder and Elizabeth Arden are also from the consumer products firm.
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