Avon Cosmetics, one of the pioneers of direct-selling techniques, has been snapped up by Body Shop owner Natura in a deal worth £1.6bn, which will create the world’s fourth-largest cosmetics company.
Natura, which also owns Aesop, is Brazil’s top firm in cosmetics, perfumes and toiletries. The combined group will operate in 100 countries through 3,200 stores and have annual revenues of over $10bn (£8bn).
Founded in the US by David H McConnell in 1886, Avon had annual sales of $5.5bn (£4.4bn) worldwide in 2018. With 6.4 million reps – including 2.2 million in Brazil alone – Avon is the second largest direct-selling company in the world, behind US giant Amway.
However, it has been struggling to modernise its global business over the past decade, as its sales model comes under increasing pressure in the online age.
In 2013, the company was forced to pull the plug on a global CRM initiative – backed by software giant SAP – due to a disastrous return on investment during a trial of the scheme. Part of a service model transformation project, it was meant to underpin the largest transformation the organisation had undertaken in 50 years.
By 2016, the company had revealed plans to shift its HQ from New York to the UK, while slashing 2,500 jobs worldwide as part of a turnaround plan. Avon sold its US operations to investment fund Cerberus. In April, LG Household & Health Care agreed to acquire both Avon and Cerberus’ stakes in the US business.
Natura acquired the Body Shop in a deal worth €1bn (£880m) from French beauty group L’Oréal in 2017, 11 years after the French giant had paid €940m (£828m) for the firm – launched by the late Dame Anita Roddick in 1976 in Brighton.
Avon pulls plug on global CRM plan