NEW YORK — Mindy Grossman, the odds-on favorite to replace Andrea Jung as chief executive officer of Avon Products Inc., is apparently staying put as ceo of HSN Inc.
This story first appeared in the February 21, 2012 issue of WWD. Subscribe Today.
WWD has obtained a copy of a letter that Grossman sent to about 250 of HSN’s senior executives, denying continuous and consistent speculation on Wall Street that she would be the ideal candidate for the Avon job.
In part, the letter read: “Not everything you read in the papers is true! I would like to personally set the record straight and reaffirm my commitment to our company.”
Pressure has been building by the week to find a successor to Jung, who plans to assume a role as executive chairman, once a new ceo is put in place. The list of possible candidates has been growing exponentially. The latest names thrown into the hopper have included former Gap ceo Paul Pressler, former Estée Lauder group president Patrick Bousquet-Chavanne and retired Procter & Gamble veteran Ed Shirley, who removed himself from possible consideration, due to his non-compete contract with P&G. Grossman and Bousquet-Chavanne had previously issued “no comment” responses.
On Friday, a spokesman for HSN also said “no comment” when asked about the copy of Grossman’s letter, in which the TV shopping ceo urged her management to press forward with her vision for growth. “Our strategy is sound,” the letter said. “A maniacal focus on growing the customer file, extending our reach across all our platforms and providing her with amazing products and experiences needs to always be at the center of everything we do.
“Stay focused. Don’t let external noise distract us from the job at hand,” it continued. In the letter, Grossman said she is looking forward to attending a town hall meeting next week, a leadership meeting on Feb. 27 and a brand rally at the end of next month. “These are all opportunities to share our vision and how we can all continue to work together to grow the HSN brand and business today and in the future,” the letter concluded.
“I am proud to lead this company, I am proud of what we have accomplished as a team and I know we will continue to do great things!” she said.
Avon’s Chinese operations have come under the scrutiny of the Securities and Exchange commission, which is looking into its compliance with the antibribery Foreign Corrupt Practices Act.
John Lin, president of Avon’s Canadian division, will take over the firm’s China operations, according to a spokeswoman for the firm. He succeeds René Ordoñez, who will lead Avon’s business in southern Latin America.
The SEC is also looking into the company’s dealing with Wall Street analysts.
The power vacuum atop Avon, as well as its operational troubles and the SEC inquiries, have put the company in a weakened position, but it’s not clear that there are any would-be acquirers ready and willing to pounce.
And then there’s the sheer size of the business. The price tag at the start of any takeover process would be $10.7 billion — the value of all of the company’s outstanding stock and debts.
“The problem with Avon is that it’s too big and not digestible for other direct sellers,” said investment banker Elsa Berry, head of Houlihan Lokey’s cross-border consumer coverage.
But by buying Avon, an acquirer would immediately gain a commanding global position in the direct merchant business.
“Avon presents both the best and the worst because of its size,” Berry said. “Direct selling is a very specialized business and it’s very articulate, very strategic-orientated, very detail-orientated. This is not just a turnaround, this is a big turnaround, so a lot of companies, why would they get out of their comfort zone?”
Berry said it was more likely that, if Avon were snapped up, it would be by one of the large private equity funds that still have lots of money to spend and could bring in new management to fix up the firm.