Avon Products Inc on Monday won the dismissal of a securities fraud lawsuit accusing the cosmetics company of concealing its inability to stop workers from bribing officials in China to win business there.
U.S. District Judge Paul Gardephe in Manhattan found no showing that Avon, former Chief Executive Andrea Jung and former Chief Financial Strategy Officer Charles Cramb intended from 2006 to 2011 to deceive shareholders about the company’s knowledge of alleged bribery, such as through corrupt “dinner and karaoke” events, and dependence on bribes to boost sales.
In a 59-page decision, Gardephe also said Avon shareholders did not show the company intended to deceive them about its ability to comply with the federal Foreign Corrupt Practices Act, which prohibits bribing foreign officials.
The lawsuit was brought on behalf of shareholders from July 31, 2006 to Oct. 26, 2011, and had claimed that Avon’s corporate culture was “actively hostile” to effective oversight. Gardephe said the plaintiffs may amend their complaint if they wish.
Gregg Levin, a partner at Motley Rice representing the lead plaintiffs, did not immediately respond to requests for comment.
Jennifer Vargas, an Avon spokeswoman, said the New York-based company does not discuss pending litigation.
Germany’s LBBW Asset Management Investmentgesellschaft mbH and SGSS Deutschland
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Avon Relaunches Marketing Plan And Focuses On U.S.
by Tina Williams • • 0 Comments
In an exclusive interview with Fortune magazine, CEO of Avon talks about a marketing plan they hope will revive their sales.
Avon Products is betting heavily on an e-commerce and social-selling relaunch to get Avon back to profitability next year. The world’s largest direct seller of beauty products urgently needs to stanch an exodus of its famous Avon Ladies that has led both the size of salesforce and revenue in North America to fall by half in only a few years, and lose nearly $150 million.
Avon CEO Sheri McCoy (No. 27 on our Most Powerful Women list) sat down with Fortune for an exclusive interview, explaining why she thinks this initiative is so important and why she remains committed to the U.S. market.
Why the U.S. remains a priority even as some industry and Wall Street analysts say Avon should pack it in in its home market:
“To not compete in one of the largest markets in the world doesn’t make sense.”
“It’s the founding country of the brand- there are a lot of roots to the brand.”
“It’s easy to say, let’s walk away from it—I don’t think it’s the right thing to do.”
“Beauty and direct-selling in the U.S. are both growing: so it’s attractive from that standpoint.”
Why the
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Avon Makes List Of 100 Best Companies For Working Mothers
by Tina Williams • • 0 Comments
Working Mother magazine named Avon Products, Inc. as one of the 2014 Working Mother 100 Best Companies for outstanding leadership in establishing policies, programs and corporate culture that supports working moms, including child care, flexible work arrangements, paid parental leave and advancement of women. Companies are also measured on access to and usage of family friendly programs.
“At Avon, we’re committed to giving all of our Associates, including our working parents, the support and flexibility they need to succeed,” said Sheri McCoy, Chief Executive Officer of Avon Products, Inc.
“As a working parent myself, I know first-hand the balancing act that’s required to have a successful family and professional life.”
Carol Evans, president, Working Mother Media said, “The Working Mother 100 Best Companies are the leaders in the advancement of women by supporting their need to integrate family and work successfully. We are thrilled to honor the U.S. companies that put words into action and build family-friendly cultures on the foundation of thoughtful policies and effective programs.
Women now make up 50% of our workforce. We need to make sure they have the support to be outstanding moms as well as great employees.”
Jennifer Owens, editorial director of Working Mother Media, noted, “In its
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DSA Responds To Avon Withdrawal, Speculation From Politico
by Tina Williams • • 0 Comments
Politico has speculated that the reason for Avon withdrawing from the DSA is due to the Herbalife/Ackman battle:
The cosmetics company Avon has withdrawn from the Direct Selling Association trade group, making some thinly veiled, indirect references to the Herbalife fight unfolding in Washington, D.C., and beyond.
“We believe the association’s agenda in the U.S. is overly focused on the issues of a few specific brands rather than industry-wide challenges,” the company said in a letter to other members explaining its departure. “We believe that the U.S. DSA Code of Ethics requires updating to better reflect the current state of the industry in the U.S. … As the U.S. DSA is currently operating, we do not believe that either of these issues will be addressed.”
The nutritional supplements company Herbalife has been embroiled in a fight with hedge funder and billionaire William Ackman over the company’s business practices. Ackman and his firmPershing Square Capital have made a massive short bet that Herbalife will fail — and have been working regulators to investigate the company’s business practices.
The DSA — of which Herbalife is a major member — has recently embarked on a major public affairs and PR campaign in support of the direct-selling industry. That push happened to coincide with Herbalife’s
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MLM Attorney, Kevin Thompson, Responds To Avon DSA Withdrawal
by Tina Williams • • 0 Comments
Recently, Kevin Thompson, THe MLM Attorney, covered in an article that Avon withdrew from the DSA because they’re dissatisfied with the direction the organization is heading.
Now, Kevin Thompson responds to the withdrawal and what it could mean.
Letter from Avon:
To our U.S. direct selling colleagues,
At Avon, we strongly believe in the power of direct selling to enhance people’s lives. Our entire business model is based on our commitment to helping women build better lives for themselves and their families. And we know that multi-level marketing, in some markets and with the appropriate guardrails, is a robust and effective channel for distributing products to consumers.
As you may be aware, this week Avon made the decision to exit the U.S. DSA. This decision came after careful consideration and more than a year of thoughtful discussion. This decision was driven by two key issues:
• We believe the association’s agenda in the U.S. is overly focused on the issues of a few specific brands rather than industry-wide challenges.
• We believe that the U.S. DSA Code of Ethics requires updating to better reflect the current state of the industry in the U.S.
As the U.S. DSA is currently operating, we do not believe that either of these issues will be addressed.
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Avon, Dissatisfied, Withdraws From DSA
by Tina Williams • • 0 Comments
In a press release dated September 12th, Avon stated they were withdrawing from the DSA because of their dissatisfaction with the organizations direction. They sent a letter, addressed to “U.S. direct selling colleagues”, which shares their decision was driven by two key issues:
1. They believe the DSA’s agenda in the U.S. is overly focused on issues of a few specific brands rather than industry-wide challenges.
2. They believe that the U.S. DSA Code of Ethics requires updating to better reflect the current state of the industry in the U.S.
Avon is not exiting the World Federation of Direct Selling Associations, local market DSAs, or other direct selling trade organization outside of the United States (many of which they are founding members of). They believe these associations play an important role for Avon. Avon continued to share that there are three major aspects of their business model that they believe further safeguards their representatives and consumers.
1. The Avon business model does not rely on nor does it encourage sales of inventory, training or business support materials between representatives. The core of their model is retailing.
2. Avon has reasonable return policies and representatives are not left holding excess inventory.
3. Avon limits earnings to three generations. They do
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Avon Continues To Struggle After CFO Resigns
by Tina Williams • • 0 Comments
Avon’s stock is falling Tuesday after its chief financial officer resigned to take a CFO job in another industry.
Late Monday Avon Products Inc., which has struggled to turn around its business, said that Kimberly Ross’ resignation is effective on Oct. 2. Avon’s vice president and corporate controller, Robert Loughran, will be interim CFO while the New York company searches for a permanent replacement.
Avon is the world’s biggest direct seller of cosmetics, but its sales have been steadily declining. The company has reduced costs, cut thousands of jobs and left unprofitable markets to try to improve its business.
Ross, who joined Avon in 2011, leaves big shoes to fill, said Wendy Nicholson of Citi Investment Research in a client note. Ross helped sell jewelry company Silpada, exit weak markets and refinance the balance sheet, Nicholson said. But Avon still has a lot of work to do in its turnaround plan, she said, and that’s a problem as it may take a while to hire a new CFO.
“Avon’s overhead costs seem still way too high, its internal controls/systems are still weak, its cash flow is still depressed and too many markets are still in disarray,” she wrote.
The analyst cut Avon’s rating to “Neutral”
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Avon CFO Resigns
by Tina Williams • • 0 Comments
The Wall Street Journal reported early yesterday morning that Avon CFO, Kimberly Ross, has resigned.
Avon Products Inc. announced Monday that Chief Financial Officer Kimberly Ross is resigning from the embattled beauty-products company, effective early next month, to become CFO at oil-field services company Baker Hughes Inc.
Martin Craighead, Baker Hughes chairman and chief executive, stated that Ms. Ross’s “extensive record of accomplishments spans several industries and is a testament to her effective partnering with operational leaders in various geographies and business environments.”
She begins her new role at Baker Hughes effective Oct. 22.
Avon appointed Avon’s corporate controller, Robert Loughran, to serve as acting CFO as the door-to-door seller of makeup and consumer products searches for a permanent successor. Mr. Loughran is a 10-year Avon veteran and was appointed vice president and controller in 2012.
Avon Chief Executive Sheri McCoy said Ms. Ross “has been a strong leader for Avon over the past three years. I appreciate her partnership as we’ve worked together on Avon’s turnaround journey. We wish her all the best in her new role.”
Ms. Ross stated that she is proud of the work accomplished by the Avon team. She also stated that she thinks Avon “is laying the right foundation for the future, and I look
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Avon’s Profits Fall 40%
by Tina Williams • • 0 Comments
Avon Products Inc, a direct seller of beauty products, reported a 40 percent fall in quarterly profit as sales were hurt by increased competition in key markets such as Latin America and the United States.
Net income attributable to Avon tumbled to $19 million, or 4 cents per share, in the second quarter ended June 30, from $31.9 million, or 7 cents per share, a year earlier.
Revenue fell 13 percent to $2.19 billion, excluding the impact of currency fluctuations.
About Avon
Avon Products, Inc, known as Avon, is an American international manufacturer and direct selling company in beauty, household, and personal care categories. As of 2012, Avon had annual sales of $10.0 billion worldwide in 2013.
It is the fifth-largest beauty company and second largest direct selling enterprise in the world, with 6.4 million representatives. Avon Products is a multi-level marketing company. The company’s CEO is Sherilyn S. McCoy, who was appointed to that position in April 2012. The former CEO, Andrea Jung, became the executive chairman of the board.
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Avon Raises $4 Million For Cancer Research
by Tina Williams • • 0 Comments
The 12th annual Avon Walk for Breast Cancer season continued in San Francisco this weekend, raising $4 million to accelerate breast cancer research; improve access to screening, diagnosis and treatment; and educate people about breast cancer.
The Avon Walk San Francisco – the fifth of eight 2014 Avon Walks across the country – attracted 1,800 participants from 37 states, Washington, D.C. and France. In addition, 238 breast cancer survivors and 301 men joined together to raise lifesaving funds for breast cancer.
During the Closing Ceremony at Fort Mason, Kristin Crosland, a breast cancer survivor and first time Avon Walker, shared her breast cancer journey with fellow walkers, volunteers, family and friends. “My 18-month breast cancer journey has had its Lifetime Television for Women melodrama moments.
I have late stage disease, I received a quick death sentence from my first doctor, battled a life threatening blood clot, and have endured the heartache of some pretty dicey CT scans,” Crosland shared. “But I have come to realize that despite all of this, I am one of the fortunate ones. I have received first rate medical care. I have the love and support of so many people from near and far. And this weekend, I