Avon Products Inc named Johnson & Johnson executive Sherilyn McCoy as its new CEO, ending a four-month outside search for a fresh face to refocus the company and turn around sales at home and abroad.
The news comes a week after the world's largest direct seller of cosmetics rejected a takeover bid from fragrance company Coty Inc.
"This is likely a clear sign that Avon's board is actively resisting Coty's acquisition offer, especially given the timing of today's announcement so quickly on the back of last week's public offer by Coty," Bernstein analyst Ali Dibadj said in a research note.
In an interview last Monday after Coty made its bid for Avon public, Coty Chairman Bart Becht said the bid process would be complicated by Avon naming a new CEO. Coty could not immediately be reached for a comment on McCoy's appointment.
McCoy faces the task of turning around a company that has suffered sliding sales at home and in emerging markets such as Brazil and Russia. The new CEO will also be charged with boosting the morale of its diminished and often demoralized army of U.S. sales representatives.
The company, famous for the "Ding Dong, Avon Calling" advertisements in the 1950s and 1960s, also faces a federal probe into whether it broke U.S. anti-bribery laws overseas.
In December, Avon announced it would look outside the company for a replacement for current Chairman and CEO Andrea Jung, 53, who will become executive chairman.
Investors' lack of familiarity with McCoy, Jung's continued involvement as chairman, and the timing of the announcement so quickly after the takeover offer by Coty would likely disappoint investors, he said.
Avon's shares fell 3.5 percent, or 82 cents, to $22.59 in early trading on the New York Stock Exchange.
McCoy, 53, was with the pharmaceutical company for three decades, and most recently served as vice chairman of Johnson & Johnson's pharmaceutical, consumer, corporate office of science and technology, and information technology divisions.
Analysts gave her high marks for reshaping the company's pharmaceutical business as it faced patent expirations on some major drugs including the anti psychotic Risperdal and the epilepsy treatment Topamax.
But in January 2011, McCoy also took control of the consumer products business, which includes the Tylenol and Neutrogena brands.
The over-the-counter drug business was already facing manufacturing issues that had caused a series of recalls. Quality control problems at J&J's consumer unit were deemed so pervasive that U.S. health regulators took over supervision of three manufacturing plants a year ago.
McCoy has "inherited a bit of a mess, but unfortunately for her I think that mess never got better," Cowen & Co analyst Ian Sanderson said. In February, the company said it was recalling its entire U.S. supply of infant Tylenol after parents complained about problems with a new dosing system.
McCoy will take up the new post April 23. She will also serve as a director on Avon's board.
Some Avon investors said last week that they wanted to wait to see a new CEO's plans for the company, rather than accepting a bid for Coty.
Tough Task Ahead
The new CEO has "a unique combination of strategic and finely honed operational skills, a significant turnaround track record, global experience and people leadership," Fred Hassan, lead director of Avon's Board, said.
McCoy will report to the company's board of directors, Avon said in a statement on Monday.
McCoy was promoted to the post of vice chairman at J&J in December 2010, setting her up as a possible successor to CEO William Weldon. But in February, J&J announced that Alex Gorsky, who was named vice chairman at the same time as McCoy, would be the company's CEO, effective April 26.
McCoy joined J&J in 1982 as a scientist in the company's personal products unit. She had been in charge of J&J's pharmaceutical division since 2009 and has held senior management roles in the company's medical device business.
"You have got to give her some credit for reshaping the pharmaceutical division into a very well run and what looks like a very well-positioned business at J&J," Morningstar analyst Damien Conover said.
Sanderson said McCoy was "very impressive" when she ran a meeting for analysts and investors to review J&J's pharmaceutical business last May.
"She has really steered that business through some fairly major patent expirations over the past couple of years and made the pipeline relevant again," Sanderson said, pointing to new medicines for prostate cancer, stroke prevention and psoriasis.