Barington Capital Calls On Avon Products Board To Initiate Search For New CEO

(RTTNews) - Investment firm Barington Capital Group, L.P. Said Thursday that an investor group led by Barington, including NuOrion Partners AG, is calling on the Board of Directors of Avon Products, Inc. (AVP) to immediately begin a search for a new Chief Executive Officer.

According to the firm, Avon CEO Sheri McCoy, during more than five years since took post, has overseen a tremendous destruction of shareholder value. Avon's stock price has fallen by more than 80% since Avon announced that it had appointed McCoy as CEO - from $22.69 on April 9, 2012 to under $3.65 currently.

Barington noted that under McCoy's leadership, earnings per share have fallen from $1.20 in 2011, the year prior to her appointment, to a current consensus estimate of $0.32 for 2017.

Shares of Avon Products plunged around 22 percent on Thursday after the company reported a net loss in its first quarter, narrower than last year with higher revenues. For full-year 2017, the company expects constant-dollar revenue growth in the low single-digits, adjusted operating margin expansion of 100 to 140 bps over the prior year and free cash flow to be slightly positive. The company added that it is on track to achieve its 2017 cost savings target of $230 million.

In a letter to the Board, Barington said that it strongly believes, as said in 2015, that with the right leadership in place Avon can recover its position as a leading global beauty brand and create significant long-term value for shareholders.

Barington also questioned then the ability of McCoy to manage the business effectively, including restoring sales growth and reducing the Company's bloated cost structure.

"While Avon has taken steps to improve its operations, we believe that efforts need to be dramatically intensified under new leadership. Based on today's substantial stock price decline, in spite of positive 2017 guidance, we believe that most shareholders would agree," the company said.

In the after-hours trading, Avon shares gained 1.10 percent to $3.66.