Avon names a new CEO

Investors were not pleased with the choice of Sherilyn McCoy to lead the company.

By Kim Peterson Apr 9, 2012 1:46PM
That 3.5% drop in Avon Products (AVP) on Monday was a clear message to the company: What were you thinking?

Investors were unhappy with the company's new choice of CEO. After all the problems with Avon's last CEO, you'd think that just about anyone would be an improvement. But no. As far as the market is concerned, Avon made a bad choice in Sherilyn McCoy.

Post continues below.
Let's start with this: McCoy recently led the consumer division at Johnson & Johnson (JNJ). That division has suffered dozens of product recalls stemming from quality problems at the factories that make Tylenol and Motrin. The recalls -- the most recent of which was in February -- have cost the company more than $1 billion in sales.

To be fair, McCoy took control of the consumer products division only in January 2011. The problems began long before that. But she didn't seem to make much progress in her first year at the helm. Before that, she won praise for improving the company's pharmaceutical business. She joined the company in 1982 as a scientist in the research division.

Another problem with McCoy is that she's unknown to investors. She was thought to be next in line for the CEO spot at J&J, but the company passed her over and named Alex Gorsky to the job, Forbes reports.

Does McCoy have what it takes to fix Avon's long-running problems? Right now, the market is not convinced.

The company's previous CEO, Andrea Jung, stepped down amid shrinking profits and declining sales in some markets. The company has been caught in a bribery investigation that started in China and has expanded to other countries, according to The Associated Press. Federal regulators are looking at Avon's relationships with financial analysts.

Avon's stock has plunged in the past year.

Jung will become the executive chairman of the company -- which makes very little sense -- while McCoy moves into the CEO role.

McCoy's first job will be to handle the takeover offers coming from Coty. Avon rejected the first offer as too low, but Coty is very aggressive in the acquisition arena and may come back with another try.

After that, McCoy will need every management trick in the book to turn Avon around.

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27Comments
Apr 9, 2012 9:08PM
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As a Avon rep for many many years, it is a shame what is happening to  AVON and their products.  The company has the Avon Lady spending money to make a little profit.  You have to spend money for samples. returns and do you know those books you look at well it depends on how may you order so that can be from 50+ cents down to may be 25cents.  Those sample that you throw away, can cost from 60 cents for one sample.   At one time everyone was making some money, now it is another story for all.Smile
Apr 9, 2012 8:42PM
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I am an Avon Rep. and I think the problem is with quality.  Avon used to have good quality items, now the qulity has gone down.  That's where they need to improve!
Apr 9, 2012 9:11PM
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Real simple,  quit paying the CEO's so much money, lower the prices, improve quality and listen to the consumers... The consumers are the one's that make it happen. If over seas sales are 70% of AVON products maybe they need a CEO for that location. Think about it, sell AVON for big bucks and move on to newer things.
Apr 9, 2012 8:12PM
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you would think Avon would give the job to someone with a better track record. Why hire someone who is known to lose money? Then keep the other person who is known to lose money on board. No wonder Avon isn't making it with crappy decisions like this who would take the products seriously!

 

Apr 9, 2012 9:25PM
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I'm a former Avon rep for a reason. I had my shipment stolen and filed a police report, caught the perp and Avon still treated me like crap. They refused to have a conversation with the delivery driver who left the box at the wrong door and then the delivery company (independently owned) refused to deliver to me anymore, because I became a liability. What crap! Avon refused to help me. Then the jerks charged me  a fee for reinstating my account, which I never agreed to do. I had to find out by talking to my finance about refinancing my house. I had a black mark on my credit! I called Avon and for the first time they admitted they were wrong. And that is supposed to do me good? If Avon goes down, it will be their own doing. You can't treat your workforce like garbage and expect greatness in return.
Apr 9, 2012 6:01PM
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“After all the problems with Avon's last CEO, you'd think that just about anyone would be an improvement.”

So Jung’s punishment for making a mess of Avon is a higher paid job with less responsibility!


Apr 9, 2012 10:44PM
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I am an avon representative and let me tell you where it all began...charging $10.00 to ship anywhere from one piece of merchandise (let's say the item costs $5.99) to ten pieces of merchandise.  I have lost almost all my clients because they do not want to pay $10.00 for shipping, nor do I blame them.  If I have one client who buys one item, they don't want to pay that shipping fee and I don't think I should get stuck paying it.....its crazy.  Not to mention, if you return merchandise, I have to refund your money to you, but I don't get my money back from Avon, I get a credit, which is bullcrap....so Avon--------lets start with these two things!!!!!
Apr 9, 2012 8:37PM
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As my sainte father used to say,"In today's corporate America, you fail upward.  Sad.but true:  run a corporation into the ground, and you get promoted.

 

We are SO DOOMED in this country...

 

Apr 9, 2012 6:52PM
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Don't you know that's how it works now !  The worst they are at a job the more they get paid!!  Remember Wall Street! Sad commentary.
Apr 9, 2012 6:37PM
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AVON should take the offer from COTY.  Jung and McCoy should be shown the door!!
Apr 9, 2012 9:39PM
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I use many Avon products; however, many of their products are getting way too expensive.  Also their clothes are not the quality that I like.  _ I mean I can get some better quality clothes at Walmart.  Now to discuss their shoes.  Really?  How many women actually want 3 - 4 1/2 inch heals.  How about a nice boot or sandel that has a heal of 1 to 1 1/2 inches.  I really like my Avon lady, but more and more I keep saying, "I'm sorry I don't need anything from the catalog this time"  I hate to not buy things from her each time, but they just aren't what they use to be.  Go back to the way it ways!
Apr 9, 2012 11:04PM
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I am an Avon Rep and I have read the comments. You are all correct. I feel like I am talking to foreigners when I call with a problem. When they have to ask me how do you spell Wells Fargo something is fishy. Poor quality merchandise is part of the problem. It is very costly to return the products. I pay that cost, I do not pass it on to my customers. It is not their fault that the products are made so cheaply.

When I started selling Avon about 17 years ago idt was a better experience. They are going downhill.

lmh_43
Apr 9, 2012 10:08PM
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Looks like foreigners are running the business now.  Starting with the outsourcing of telephone reps.  You call and you can't even understand what the #$!$! they are saying.  I just hang up on them and call back until I get someone who can speak ENGLISH clearly.  They get rid of the good District Managers to bring in less experienced ones so they can run the heck out of them and pay less (I suppose).  It use to be so united now its everyone for theirselves.  If you run into problems FORGET it if you think  you are going to get it fixed.  getting ready to leave this company.  And its true -- reps used to make s-o-m-e profit, now they charge you for putting your order 5-minutes late.  Are you kidding, that's the only profit being made and they charge you another $7.50 late charges plus your $7.50 for being an e-rep. that's a total of $14.00 dollars.  and you'll probably make $8.00 profit with an outstanding late fee.  OMG --

Apr 9, 2012 10:46PM
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I also am a former "Rep" and I will tell ya...
My experience was for the birds!  My "recruiter" went through tooth and nail (almost literally) to get me started. Attended my first couple weekly sales meetings. I was stunned to discover they weren't exactly a Full house; barely a dozen Reps present - if that... My Recruiter would call me at least twice weekly to 'check up on me', which was touching. However, when I would leave her VM, she never returned my calls nor responded to emails... 

The sales meetings? She made so many empty support claims, that I was ready to donate her to Goodwill.... So much for Avon being a great home-business to invest. Whatever. 

Any wonder I left after only 3 months
Apr 9, 2012 11:29PM
Apr 10, 2012 12:09AM
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Sounds like a big disconnect between the exec mgmt and the folks on the front line.  Does not bode well for the future of the business model.  They'll be gobbled up by a  healthy company like Coty, if only to gain access to the distribution network.
Apr 10, 2012 8:38PM
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I've sold Avon for nearly 13 years.  I decided to quit after calling the call center to get information regarding a return I made and got India!   With all of the issues going on with the economy, AVON has outsourced its call center to INDIA!  That was it for me.  I cannot promote a company that outsources American jobs to a forgein country and the lack of interst for my refund, nearly 120 dollars is STILLED owed me.  No thanks AVON, I will buy MARY KAY INSTEAD! 
Apr 10, 2012 3:31AM
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Sounds like one of the first things this new CEO needs to do is make an appearance on "Undercover Boss"  to see how the rest of us/sales reps are dealing with this company.

Wink

Apr 10, 2012 12:33AM
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Smile

 

Will Ms. Jung resign her seat on the Board of Directors of General Electric?  I just sent my Proxy vote to GE, and recommended she be reselected to serve.  Perhaps there are problems...I viewed her as a point of light, not window dressing!

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