Avon’s new CEO passed over at Johnson & Johnson
AP Business Writers
NEW YORK (AP) – Avon is hoping a new CEO can give it a much-needed makeover.
The struggling cosmetics seller on Monday tapped long-time Johnson & Johnson executive Sherilyn S. McCoy as its new chief executive. The announcement ended a four-month search to replace embattled CEO Andrea Jung, who had come under fire for failing to stem the company’s declines and wrap up a bribery investigation.
Avon Products Inc. said Jung will remain executive chairman after McCoy takes over later this month. Shares of the New York-based company fell more than 2 percent in morning trading.
McCoy’s emergence at Avon comes less than two months after she was passed over for the top spot at Johnson & Johnson, which in February announced that Alex Gorsky would take over as CEO later this month. Bill Weldon, who has served as chief executive for the past decade, plans to step down at the company’s annual shareholder meeting April 26.
McCoy’s resignation from Johnson & Johnson, which is effective April 18, will mean she won’t have to sit through that meeting.
Gorsky, who heads the medical devices and diagnostics unit, and McCoy, who heads the pharmaceutical and consumer businesses, had been considered the most likely successors to Weldon after both were named company vice chairmen in January of last year.
The announcement from Avon also comes just a week after the company flat-out rejected a $10 billion takeover offer from the smaller beauty products maker Coty Inc.
Founded in 1886, Avon became a fixture in households across the country as its legions of “Avon ladies” went door to door selling makeup to family, friends and acquaintances. Its brands include Avon Color, Skin-So-Soft and mark.
But North American sales have dropped off over the years and about 80 percent of Avon’s $11 billion in annual revenue now comes from overseas. The company has frequently missed analysts’ earnings expectations and posted weak sales in some of its largest markets.
The Securities and Exchange Commission is also investigating Avon’s contact with financial analysts in 2010 and 2011 as part of a bribery investigation.
There are outside pressures as well. Last week the company rejected Coty’s $23.25 per share takeover bid, dismissing it as a low-ball offer. At the time, that was a 20 percent premium to Avon’s previous closing stock price. Coty said it won’t pursue a hostile takeover offer.
Jung, 53, joined Avon in 1994 as president of product marketing. She rose through the ranks to become CEO in 1999 and added the chairman title in 2001. When Avon announced its search for a new CEO this past December, the company said it would separate the CEO and chairman roles.
Expectations will be high when the McCoy becomes Avon’s CEO and a board member on April 23. McCoy has 30 years of experience with Johnson & Johnson, where she served as vice chairman of the executive committee and a member of the office of the chairman, with responsibility for brands including Neutrogena, Aveeno and Lubriderm.
Prior to that, she was worldwide chairman of pharmaceuticals.
“Sheri has a unique combination of strategic and finely-honed operational skills, a significant turnaround track record, global experience and people leadership,” Fred Hassan, lead director of Avon’s board, said in a statement on Monday.
Avon markets its products in more than 100 countries through about 6.4 million independent sales representatives. Its annual revenue is more than $11 billion.
Avon’s stock fell 58 cents, or 2.5 percent, to $22.84 in morning trading Monday. Through the end of last week, its stock was down about 26 percent from its 52-week high of $31.60 last May and is worth a little more than half of its all-time high of $46.11 in 2004.
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