It’s an ignominious end for a long-time American beauty icon.
Now that Avon Products (AVP) has sold off most of its declining North American business, the New York-based direct seller of beauty products is set to slash 2,500 jobs and move its operational headquarters to the United Kingdom.
In December, Avon said it was selling an 80.1% stake in its U.S. And Canada division to private equity firm Cerberus Capital Management, known for its turnaround expertise, for $170 million, and keep the rest. Avon had been unable to stanch years of deteriorating sales and a shrinking army of Avon Ladies in the United States.
“With the recent completion of the sale of the North American business, our commercial operations are now fully outside of the United States, allowing us to dramatically rethink our operating model,” Avon CEO Sheri McCoy said of the company’s three-year plan.
Avon’s sales in North America fell by more than half between 2007, when they hit an all-time high of $2.62 billion. Where there were once 600,000 Avon Ladies in North America, there are now only 400,000, a devastating blow for a direct-selling company. The company struggled to keep up the rise of beauty retailers like Ulta Beauty (ULTA), improved selections at stores like Walgreens (WHA) and CVS, (CVS) as well as a slowness in adapting direct-selling to the modern lifestyle.
It wasn’t always so. Avon was for years part of popular culture thanks to its famous “Ding Dong, Avon Calling” advertisements in the 1950s and 1960s. Avon began in 1886 in New York when door-to-door bookseller David McConnell found that the perfumes he mixed himself were popular with his customers. Avon soon became one of the few ways women could make extra money or or be entrepreneurs.
Avon will keep its current research and development facilities in the New York area, but gradually move its headquarters to Britain, one of its biggest markets. (Its top market is Brazil.) Cerberus has not yet announced its plans for overhauling the North American business.
It will also continue to be listed on the New York Stock Exchange and legally headquartered in the United States.