“Avon’s six million sales representatives, the backbone of Avon, deserve a senior management team that can reinvigorate the Company and introduce new products and marketing campaigns that will resonate with customers”.
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Barrington is intending to nominate a number of candidates for the board of directors for the annual meeting attempting to gain some sway in the board.
The Barington Group noted that it strongly believes in Avon’s long-term prospects and are confident that with the right leadership in place Avon can recover its position as a leading global beauty brand. Since then, Avon’s shares have slid some 80 percent, giving it a market value Thursday of roughly $1.6 billion, as it faced declining volumes and shrinking market share within the beauty industry. In it, the private equity group called for cutting costs by up to $700 million in up to 24 months by “streamlining” the company.
According to the people, Cerberus Capital will become the largest shareholder of the Avon Products. The company said it regularly reviews a wide range of options for its business and operations.
According to Barington Capital Group, which also includes NuOrion Partners AG and other investors, believes that the cosmetic giant does not need to take cash from private equity firm and has an ability to fix its operations. “Avon welcomes open communication with and feedback from our shareholders”.
The Journal report renewed optimism that investors may be able to wring some value from Avon shares, which have been pummeled by three years of losses and the waning effectiveness of its door-to-door sales model.
Avon Products, Inc.is a manufacturer and marketer of beauty and related products. Avon also has struggled recently with currency fluctuations and a new industrial production tax in Brazil, resulting in an unexpected loss last quarter.
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“We are convinced that the addition of new independent directors to the board is a necessary first step toward developing and executing a strategy that will unlock Avon’s value potential for all shareholders”, Barington said in the letter. The stock now has an average rating of “Hold” and a consensus target price of $7.73.
