Avon Products Inc. chief executive officer Sheri McCoy will step down in March, following pressure from activist investor Barrington Capital, and after the company posted a $46 million loss for the second quarter.
A successor has not yet been identified. McCoy will step down March 31.
“We’ve made great progress in strengthening the Avon brand through new positioning, increased investment in social media, and innovative, high-quality products,” McCoy said in a statement. “We continue to live up to our purpose of empowering women by supporting and advancing Avon’s global network of nearly 6 million women, while also having rebuilt a culture of accountability.”
“Today the Avon brand has nearly 100 percent awareness in top markets and is the No. 1 direct selling beauty company in the world,” McCoy continued. “Since the launch of Avon’s three-year Transformation Plan, we successfully separated the North America business and significantly strengthened the company’s financial position. With the successful recruitment of a senior executive team with the skill and experience to implement the next phase of our strategy, the platform is in place for a new ceo to continue accelerating the pace of change and take Avon to sustainable profitable growth. I look forward to continuing to drive the Avon business forward and to working with our leadership team to ensure a smooth transition.”
Avon posted a $46 million loss for the quarter, compared to a $36 million loss in the year-ago period. Loss per share was 12 cents. Revenue was down 3 percent, to $1.4 billion for the quarter.
“Second-quarter performance fell below our expectations as we cycled a strong quarter last year, said McCoy. “As previously guided, we expect the second half to yield a stronger performance based on our exciting product innovation plans and other initiatives to increase representative activity, We continue to implement the strategies defined in our Transformation Plan to better meet the needs of our representatives and continue progress towards delivering sustainable profitable growth in the longer term.”
In addition to an earnings and sales dip, Avon faced declines in its number of representatives, with active representatives down 3 percent in the quarter. Of Avon’s $46 million loss, $3 million, or 1 cent per diluted share, is attributed to the company’s spinoff of its North America operations, which is sold to Cerberus Capital Management in 2016.
Avon is in the middle of a three-year turnaround plan. It generated $120 million in cost savings for 2016 and lowered debt by about $260 million, while extending its maturity profile. For 2017, Avon is aiming to save $230 million, a figure that includes run-rate savings from 2016 and savings already had in 2017.
For the full year, Avon expects revenue growth in the low single digits. The business previously planned for $65 million in reinvestment, which now will be around $45 million to free up cash.