Avon Products Inc. has sold the U.K.-based Liz Earle natural skin-care brand to Walgreens Boots Alliance for about 140 million pounds, or $215.5 million at current exchange.
Avon bought Liz Earle in 2010, during Andrea Jung’s tenure as chief executive officer, and had operated it as a standalone business. Avon since then has encountered a string of troubles, including a Justice Department investigation, now settled, into alleged bribes in China; a bid from Coty Inc.; a fake “bid” from a company called PTG Capital Partners, and, most importantly, challenges in turning around its core brand.
Without providing specific figures for the brand, Avon said that, in 2014, Liz Earle represented approximately 1 percent of its revenues of $8.85 billion and the same share of its adjusted operating profit of $734 million, translating into sales of about $88.5 million and adjusted profit of $7.3 million. Liz Earle accounted for about 3 percent of sales and adjusted profits in the Europe, Middle East and Africa region.
“Avon remains committed to our strategic priorities, and we are focused on promoting our own skin care and broader beauty portfolio,” said Sheri McCoy, Avon’s ceo. “It is important to ensure all areas of the business are well-positioned to deliver near-term contributions as well as long-term opportunity.
“This transaction allows Avon to realize immediate benefits while continuing to strengthen our balance sheet,” McCoy continued. “Liz Earle is the perfect fit for Walgreens Boots Alliance where it already has a strong presence in its retail stores.”
The company was founded in 1995 by Liz Earle, a former beauty editor, and her business partner Kim Buckland, and quickly gained a cult following in the U.K., with its Cleanse & Polish cleanser a particular standout.
Funds from the divestiture, an all-cash transaction, are expected to be used for the redemption of $250 million in 2.375 percent notes due to mature in March.
The price of the transaction is subject to an adjustment based on working capital.