Dive Brief:
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Beauty retailer Avon Products Inc. announced Monday that it is moving its headquarters to the United Kingdom, where it has had operations since 1959, keeping offices in Suffern, NY, and Rye, NY.
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In the process, the company is eliminating 2,500 jobs in many areas, including filled and open positions.
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The news comes two months after Avon said it would sell 80% of its North American business to Cerberus Capital Management, and at the time outlined turnaround plans that included $350 million in cost cutting.
Dive Insight:
Earlier this year analysts dismissed Avon’s turnaround plans as “age-old” and said the company’s reluctance to reveal cash flow is worrying. On a conference call in February, CEO Sheri McCoy emphasized the importance of the company’s plans with Cerebrus and said the company would continue to focus on cutting costs.
She also said that the retailer is working to bring in more salespeople (known for more than a century as “Avon ladies”) to boost its direct selling in high-potential areas like Brazil.
Avon’s struggles come as the beauty space is thriving and competition fierce, with forecasts for 5.3% annual growth through 2019, according to Euromonitor International. But Avon is largely missing out on the boom and is even seeing sales fall in Latin America, previously an area of strength.
There are sparse details on this move to the U.K., which the retailer said would be accomplished over time. But Avon shareholder investment group Barington Capital Group said Monday that the company has more to do to improve its business.
"We are pleased that Avon is following our recommendation to reduce excess costs and corporate overhead,” Barington said in a statement. “We believe that there is still much more that needs to be done to improve the business as outlined in our December 3 letter. We also continue to believe that Avon needs to add new independent directors that can help improve long-term value and ensure that shareholder interests are protected.”
In that December letter to chairman of the board Douglas R. Conant, Barington advised significant cost-cutting, criticized the board and senior management for “numerous, chronic failures,” and said it would nominate new directors.
The company will continue to be incorporated in New York and trade on the New York Stock Exchange. Avon shares rose 4% in after-hours trading on the news Monday.
