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Avon finding its footing after management trip-ups

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Avon Products is at last finding fragrance without Coty. Shareholders pushed the cosmetics firm's shares up 20 per cent on Tuesday, bringing them near the highs last spring when Coty's $10.7-billion (U.S.) bid – later dropped – was still on the cards. Chief executive officer Sheri McCoy, on the job for less than a year, has succeeded in giving investors hope again.

That's not to say the company is out of the woods. Its unadjusted operating profit fell 17 per cent in the fourth quarter from a year earlier thanks to restructuring costs and other special items. And revenue was largely flat. But signs of stabilization in key markets like Brazil, where door-to-door salesmen had been abandoning the brand, suggest the worst may finally be over.

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That's significant for a company that seemed to come unmoored in the twilight of former CEO Andrea Jung's reign, which began in 1999 and ran until last April. The board's handling of Coty's brief courtship also undermined investor confidence. Avon snubbed the fragrance maker's advances and then seemed surprised when Bart Becht, its chairman, decided to walk away.

A better move was hiring Ms. McCoy in the midst of those events. The bar for Avon's stock, and for her performance, was set low – investors had lost faith in management's ability to turn things around after Ms. Jung's later efforts failed to register. Ms. McCoy is now gaining their trust with what looks like the start of a credible makeover.

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