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The real McCoy

9 April 2012 By Richard Beales

Sheri McCoy, Avon Products’ new chief executive, should make a turnaround of the cosmetics firm a real alternative to a sale. After all, she has been running a big chunk of Johnson & Johnson, and Fortune ranked her the 10th most powerful woman in business last year. But Avon’s insistence on retaining Andrea Jung as executive chairman makes McCoy’s task look harder.

Ending the uncertainty over Avon’s leadership with such a credible hire probably gives the company sufficient ammunition to fend off takeover interest from smaller European rival Coty. And Avon has held off acting on its ongoing strategic review in order to give the incoming CEO the chance to make decisions.

Yet Jung has been the boss since 1999, and Fortune put her at number six on its list last year. In practice, having someone with such influence around full-time – potentially for a couple of years – will surely limit McCoy’s ability to make radical changes to her predecessor’s ultimately failed strategy. That’s a pity, because shareholders need a major overhaul. Until Coty showed up on April 2 with its $23.25 per share expression of interest, Avon’s stock was down by about 30 percent over 12 months.

Sure, Avon’s decision in December to split the two top roles was a step in the right direction, while Jung’s presence during a transition period makes sense. And McCoy will report to the board, which has a lead independent director, Fred Hassan, as well as Jung in the chair. It’s also possible that the executive chairman title means less than it suggests.

But having landed a creditably strong candidate as its next CEO, Avon’s board missed the chance to give her full autonomy, at least in its public statement. Investors will be hoping McCoy doesn’t find the corner office too crowded.


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