(All Images: Authors Collection)
Imagine that your doorbell rings, and you asked through a closed door “Who is it?” A female voice answers, “Avon Calling”. In the 1960’s, Avon direct sale products were considered fashionable for those ladies who could afford accessorized beauty products. It is rather remarkable today that the namesake still exists. But more than 50-years on, in 2017 changes have been initiated to restructure this once straight-forward and simpler company with a singular vision to sell as much inventory to American females as possible. The advent of the Internet has changed the way business plans are revised, and Avon was no exception. With this in mind, Cerberus Capital Management made a significant investment in the now-struggling beauty products company.
Avon’s CEO Sheri McCoy noted that during the intervention of Cerberus, international operations rose 3-percent in 2015. However declining North American sales led to a strategy of dividing the company in such a manner to enable Cerberus to execute control over Avon’s operations, marketing, branding and growth.
Consistent with the capital investment into Avon, executives moved to cut $350 million in annual operating expenses over 2016, 2017 and 2018. Speaking at an Avon investor meeting in Suffern, New York, where Avon was founded 131 years ago, it was announced that Cerberus would invest $435 million in Avon for a nearly 17-percent stake and acquire 80-percent of the company’s North American operations. The company sells makeup, skin creams, beauty products and home accessories through a network of six million sales representatives. It must now adapt to a commodity-driven economy that is a far reach from what it was in the halcyon days of 1960’s America.
Avon enters the current commodity-driven market in 2017