Avon's Turn-around Story Closes a Another Chapter

Andrew Klips |

As part of its transition to new leadership, Avon Products (AVP) said Friday that executive chairman and board of directors member Andrea Jung is stepping-down from her positions at the end of 2012. She will remain a part of the door-to-door cosmetics seller’s team in an advisory capacity.

Jung, 54, became the first woman CEO of Avon in 1999 and held that position until resigning last December. She is currently a member of the board for both GE (GE) and Apple (AAPL).

She was replaced as Avon chief executive by Johnson & Johnson executive Sherilyn S. McCoy in April. Fred Hassan, who joined Avon in 1999 and currently serves as lead independent director, will be become non-executive chairman of the board.

Hassan is presently a partner and managing director at private equity firm Warburg Pincus and previously was the Chief Executive Officer at Schering-Plough Corp. Merck & Co. (MRK) acquired Schering-Plough in 2009 in a $41.1 billion merger.

Avon is looking to be a turn-around story as it has been under tremendous pressure related to three straight years of declining profit, a rejected takeover attempt from Coty, Inc. and a federal probe for allegations of bribing foreign officials. With a background in marketing, not operations, Jung was perhaps not equipped with the tools to deal with the plethora of challenges. In August the company released earnings showing a 70 percent plummet in sales and tightening margins, citing lower demand globally for its makeup and skin-care products.

The market is apparently viewing the move as a step in the right direction for the company. Shares have been treading water around $16 for the four months, but have surged ahead to above $17 per share in morning trading.

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Companies

Symbol Name Price Change % Volume
GE General Electric Co 31.73 0.20 0.62 20,709,044
AAPL Apple Inc. 113.98 1.86 1.66 25,268,828
FICO Fair Isaac Corproation 122.36 0.88 0.72 147,651
AVP Avon Products Inc. 5.55 0.02 0.27 2,449,556
MRK Merck & Company Inc. (new) 61.34 1.22 2.03 6,669,985

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