It was one of those company names that was synonymous with American success. Started In 1886 as a perk for the female workers of a door to door book salesman in New York, Avon became an icon in American life. Over the course of the twentieth century, the company grew into a giant in cosmetics as women everywhere sold products in a peer to peer fashion.
Fast forward to 2015, and the world has changed. Cosmetics are now sold in a variety of ways, including online, and, for Americans, in all manner of stores. The door to door model of sales in America is, plain and simply, all but dead. However, for Avon, given the way the company grew, they are sticking to that sales model, and since it works better in Europe, as part of a restructuring, the company’s headquarters are moving to United Kingdom.
In addition to moving the company’s headquarters to save money on the federal corporate tax rate, the cosmetics concern will be cutting 2,500 jobs. As it is, Avon has already split off North American operations and has made that its own company which is now owned largely by Cerberus Capital Management, a holding company that specializes in acquiring “distressed” properties.
“The actions we are taking today will bring our corporate and commercial businesses closer together, which will drive efficiencies, improve operational effectiveness and deliver significant cost savings,” Chief Executive Officer Sheri McCoy said in Monday’s statement.
“With the recent completion of the sale of the North American business, our commercial operations are now fully outside of the United States, allowing us to dramatically rethink our operating model,” McCoy said.
Avon had been steadily losing money with operations largely based in North America for four straight years. Given the duration of the losses, the company had to make some move to remain the least bit solvent.
This particular move is bound to add fuel to the fire in a hotly contested presidential election year. Avon is not the first company in recent years to move its headquarters overseas to save money presumably on the the American federal tax rate. Tyco International moved to Ireland, and they aren’t the only ones.
So, we bid goodbye to another American icon. So long, Avon.
Writer’s note: as a consumer of the sorts of products Avon is known for, one of their major issues in her experience was quality. Other brands are just as good or better at the same price. Plus, Avon sold a lot of cheap crap. Yes, to be nice to friends who sold it, many of us bought from Avon, but didn’t depend on it.