REUTERS - Avon Products Inc, which has been under pressure from activist investor Barington Capital, said Sheri McCoy will step down as chief executive next year, and reported another surprise quarterly loss.
Shares of the company, which now expects to meet the lower end of its full-year forecast, fell to a more than one-and-a-half-year low in morning trading.
McCoy’s exit caps a turbulent five years for the company, which shrunk to half its size after selling most of its U.S. business, navigated a bribery scandal in China and has lost about 85 percent of its value.
Avon has also been struggling to reverse a steady decline in sales as the pioneer of direct-selling loses favor to bigger players such as Estee Lauder Cos Inc and other niche brands.
Annual sales that crossed $10 billion in 2012, are now at half those levels and are expected to drop further.
McCoy, who took the top job at the company in April 2012, had so far resisted stepping down despite repeated calls by Barington to do so since 2015.
McCoy managed to stave off some of that pressure by agreeing to sell an 80 percent stake in its U.S. business to private-equity firm Cerberus Capital Management and adding an independent director to its board, changes that Barington approved at the time.
The activist investor, however, renewed its pressure after Avon reported a surprise loss in the quarter-ended March this year, and demanded McCoy be removed accusing her of overseeing “a tremendous destruction of shareholder value” and questioned her ability to manage the business effectively.
Barington, which holds a less than 1 percent stake in the company, declined to comment.
Avon has hired executive search firm Heidrick & Struggles to identify McCoy’s successor, suggesting the company was looking for an outsider for the job.
Avon also reported a loss of 2 cents per share in the second quarter, missing analysts’ estimate of a profit of 7 cents per share, according to Thomson Reuters I/B/E/S.Revenue fell 3 percent to $1.4 billion, hurt in part by fewer active door-to-door representatives in Russia and Malaysia, and intense competition in Brazil.
Avon said it now expects to meet the bottom end of its forecast for full-year constant currecy revenue growth of low-single-digits and adjusted gross margin growth of 100-140 basis points.
Avon’s shares fell as much as 13 percent to $2.92 shortly after the market opened on Thursday.
Reporting by Siddharth Cavale and Sruthi Ramakrishnan in Bengaluru; Editing by Shounak Dasgupta