Avon Products, Inc. (NYSE: AVP) is a U.S. based, personal care manufacturer and seller company in over 140 countries across the world. Avon had annual sales of $10.8 billion worldwide as of 2010. It is the fifth-largest beauty company and largest direct selling enterprise in the world, with 6.4 million representatives. 
 

 

 

Business model and governance

Avon Product is a multi-level marketing company. The company's CEO is Sherilyn S. McCoy, who was appointed to that position in April 2012. The former CEO, Andrea Jung, became the executive chairman of the board. Jung was the longest tenured female CEO among Fortune 500 companies. 

 

Avon uses both door-to-door sales people ("Avon ladies," primarily and a growing number of men) and brochures to advertise its products.

 

History

David H. McConnell

In 1886, David H. McConnell started the business in a small office at 126 Chambers Street, in lower New York City. In 1892, Mr. McConnell changed the company name when his business partner, who was living in California, suggested that he call the business the California Perfume Company, because of the great abundance of flowers in California. 

 

Early Avon trademark

The drawing stylized word AVON mark is an expired trademark at the USPTO, and owned by Avon Products, Inc.

 

The California Perfume Company, Inc. of New York, NY filed their first trademark application for Avon on June 3, 1932 with the USPTO. Part of the description for goods and services provided to the USPTO included "perfumes, toilet waters, powder and rouge compacts, lipsticks," and other toiletry products. First use and commercial use for Avon by the California Perfume Company was on September 1, 1929. Registration was granted on August 30, 1932. The trademark is owned by Avon Products, Inc. of New York, NY. The status of the original stylized word mark for Avon is expired.

 

Global expansion

Avon sells products in over 140 countries. Brazil is the company's largest market, passing the United States in 2010. Avon entered the Chinese market in 1990, but legal changes in 1998 forced Avon to sell only through physical stores called Beauty Boutiques. The company received China's first license for direct selling in 2006. 

 

Mergers and acquisitions

Avon purchased Silpada, a direct seller of silver jewelry, in 2010 for $650 million. In May 2012, perfume company Coty offered $24.75 a share for Avon, which was nearly 20% above Avon’s stock price at the time. Avon dragged its feet and Coty withdrew its offer. 

 

Avon Foundation

In addition to its corporate pursuits, the Avon corporation is involved in philanthropic causes. The Avon Foundation for Women, a 501(c)(3) public charity, is the largest corporate-affiliated philanthropy for women in the world. Avon founded the Avon Foundation for Women with its first grant, a $400 scholarship, in 1955. Avon was committed to helping women achieve their highest potential of economic opportunity and self-fulfillment by empowering them through scholarships and support for other forms of educational and occupational training and advancement. Women's empowerment continued to be the focus through the early 1990s when Avon began to increase its philanthropy with a new emphasis on breast cancer; the Avon Foundation still awards scholarships for Avon Sales Representatives and their families, as well as for the children of Avon associates. The Avon Foundation is currently focused on two key causes: breast cancer and domestic violence. The Foundation approved $38 million in grants in 2011. 

 

Controversy

Since at least 2008, the conduct of various employees and executives of Avon has been investigated for possible violations of the law, including possible bribery and violations of the Foreign Corrupt Practices Act

 

Avon began a probe of its China division after allegations of bribery in June 2008. At least four executives, both in Asia and in the United States, were suspended in 2010, and later fired for their roles in the activities being investigated. According to the New York Times, Avon has spent over $170 million on legal fees and costs related to the investigation: $59 million in 2009 and $95 million in 2010, and $22.5 million for the first quarter of 2011. The Times reported that the final tally may be close to $250 million, after which Avon would report the findings to the United States Department of Justice and the Securities and Exchange Commission and try to negotiate the penalties that those entities may impose.[13] On February 24, 2011, Avon filed a report with the Securities and Exchange commission highlighting the investigation as a corporate risk factor that could cause investor loss.