Surely, all the Skin So Soft couldn’t prevent the sting the Avon CEO must have felt when activist investors Barington Capital Group LP and NuOrion Partners AG called for her removal.As reported in The Wall Street Journal, the activists, which own more than 3 percent of the company’s shares, made their move against CEO Sheri McCoy after the company suffered a surprise first-quarter loss in May.
Activists weren’t the only group frustrated with the direction — or, lack of direction — the CEO had taken the company since she’d assumed the position five years earlier. Droves of the company’s door-to-door sales representatives chose to exit when the company, under Ms. McCoy’s leadership, neither updated its products nor capitalized on consumers’ growing preference for online shopping.
The cosmetics company was founded in 1866 in Suffern, N.Y., by a traveling book salesman, who found success peddling women’s perfumes over titles. It enjoyed rapid growth until about a decade ago when Sephora and online shopping venues began encroaching on their turf. The company’s response was problematic: not investing in core cosmetic and skin-care lineups or embracing the digital and social media times.
While activists had had enough with the downturn, which recently include a $45.5 million second-quarter loss and a 3 percent revenue drop, one analyst asserts that replacing Avon executives is not the answer. It’s Avon’s core business model that needs the makeover.