Avon CEO Sheri McCoy to step down following investor pressure

U.S. cosmetics maker Avon Products Inc, which has been under pressure from activist investor Barington Capital, said Sheri McCoy will step down as chief executive next year, sending the company's shares sliding 9 percent in premarket 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, been hit by a bribery scandal in China and has seen its stock lose about 85 percent of its value.

Avon has also been struggling to reverse a steady decline in sales as the 130-year old pioneer of direct-selling loses favor to bigger players such as Estee Lauder Cos Inc and other niche brands, triggering discontent among its investors.

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Annual sales that crossed $10 billion in 2012, are now at half its levels and are expected to drop further.

McCoy, who took the top job at the company in April 2012, has so far resisted stepping down despite repeated calls by Barington to do so since 2015.

McCoy managed to stave off some of that pressure for a year 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 holds a less than 1 percent stake in the company.

Avon on Thursday also reported a 3 percent drop in quarterly revenue as demand fell in most of its markets including the northern part of Latin America, Europe, Middle East and Africa.

Barington did not immediately respond to a request for comment.

Avon said on Thursday it had retained executive search firm Heidrick & Struggles to identify McCoy's successor.
The company's shares were down 5.5 percent at $3.19 in trading before the bell on Thursday.