On Thursday, Avon Products Inc. (NYSE:$AVP) announced that CEO Sheri McCoy will step down from her position in 2018. At the same time, the door-to-door cosmetics seller – who has faced tremendous pressure from Barington Capital – posted another surprise quarterly loss.
After the announcement, and in morning trade, Avon Products shares dropped to a more than one-and-a-half-year low. Further, Avon Products now expects the company to meet the bottom end of its full-year forecast.
McCoy’s departure from the company wraps up a turbulent five years for the company, which, during those years, fell to half its size after selling the majority of its U.S. business, navigated their way through a bribery scandal in China, and lost roughly 85% of its value.
Activist investors Barington Capital and NuOrion Partners had called for the CEO’s departure, but McCoy, who took the top job in April of 2012, had resisted stepping down despite receiving repeated calls from Barington to do so since 2015.
And for a while, McCoy was able to fend off some of that pressure by agreeing to sell an 80% stake in its U.S. business to Cerberus Capital Management. However, the activist investor echoed its pressure after Avon Products posted a surprise loss in the quarter which ended in March of 2017. After the loss was made known to the public, Barington demanded for McCoy to be removed, accusing her of overseeing “a tremendous destruction of shareholder value.” They also questioned her ability to manage the business.
As the old saying goes, “out with the old, in with the new.” Avon Products has hired Heidrick & Struggles, an executive search firm, to identify McCoy’s successor. This is significant as it suggests Avon was looking to fill the position with an outsider.
Not long after the market opened Thursday, shares of Avon Products dropped as much as 13% to $2.92.
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