America’s worst CEO? Former Avon chief Andrea Jung left her successor Sherilyn McCoy $US3.3 billion in debts and a mountain of trouble.
It might be one of the beauty industry’s most venerable brands, but Wall Street is running out of patience with Avon as its new chief tries to undo some of the damage caused by a predecessor some describe as one of America’s worst CEOs.
The New York Times reports new Avon chief executive Sherilyn McCoy faces a big battle to rehabilitate the company’s reputation with analysts as she embarks on the company’s third turnaround plan since 2005.
McCoy is promising to cut $US400 million ($384.3 million) in costs, lift sales and almost double operating margins within two years, the Times reports.
She needs to act quickly because the company, famous for its direct sales model, is struggling under a debt burden of $US3.3 billion after a series of missteps by former CEO Andrea Jung, who was at the helm of the cosmetics giant for 13 years.
Last year’s spurning of Coty Inc’s $US10.7 billion takeover bid, which had the backing of Warren Buffet’s Berkshire Hathaway, is seen as one of Jung’s more serious sins.
Avon’s shares are down from around $US46 in 2004 to around $US17 today.
Jung’s stint “earned her a reputation as one of the nation’s worst chief executives”, NYT reporter Janet Morrisey says.
While discussions with creditors show some promise, analysts are generally wary of Avon, which has been around since 1886.
“They kept Andrea Jung for way too long, they handled Coty’s potential acquisition very poorly and everything they’ve done has been too little too late,” co-manager of Appleseed Fund Joshua Strauss tells the NYT in what appears to be a fairly typical assessment.
Nevertheless, Strauss says that if McCoy can deliver on her targets, Avon’s stock could lift as much as 50 per cent.