Avon Products Inc. Chief Executive Sheri McCoy is expected to step down, according to people familiar with the matter, after her effort to turn around the beleaguered cosmetics seller faltered.
The struggling beauty products group is in the midst of an “orderly process, nothing rushed” to find a replacement, one of the people added.
Heidrick, an executive search firm, is leading the search for a successor to Ms McCoy, under whom Avon’s shares have dropped more than 80 per cent since she took the role in 2012.
Following years of losses, the 130-year-old company last year moved to spin off its North American business and unveiled a three-year turnround strategy that targets some $100m in cost savings this year.
Avon announced on Tuesday that it had hired Miguel Fernandez, a former Herbalife executive, as global president starting on August 14, in the first step of a broader overhaul of senior management. Mr Fernandez will take over from John Higson, who is retiring in September.
Ms McCoy’s departure follows a series of negative quarterly results, which prompted activist investors Barington Capital and NuOrion Partners, which together own 3 per cent of Avon, to demand the search for a new chief executive to help turn round the business.
Cerberus Capital Management, a private equity firm that focuses on acquiring companies that require troubleshooting, invested $605m in Avon in late 2015 in an effort to return the cosmetics seller to revenue growth and profitability. Cerberus was awarded three board seats and a controlling stake in Avon’s North American business.
In the first 10 months after the private equity group took a more proactive role in running the company, Avon’s stock rose nearly 70 per cent. But subsequently negative performance has led to a fall in the share price of nearly 40 per cent.
Avon has failed to capitalise on the fast growth in ecommerce, unlike rivals such as Revlon and Estée Lauder. Also, it has been criticised by activist investors for not having a strategy that utilises bricks-and-mortar retailers.
The WSJ first reported the news of Ms McCoy’s planned departure.