“U.S. regulators are formally investigating whether Avon broke bribery laws overseas, and the cosmetics company said it was again reassessing its strategy after quarterly profit fell far short of expectations,” Jessica Wohl reports for Reuters.
“Shares of Avon fell as much as 19.6 percent on Thursday, as analysts blasted Chairman and CEO Andrea Jung and questioned whether she and her team can come up with a turnaround plan as quickly as they hope to,” Wohl reports. “Analysts took longtime leader Jung to task during Avon’s quarterly conference call, as they have in prior quarters. ‘Why should investors believe management and the board have any control over the business at this point?’ asked Stifel Nicolaus’ Mark Astrachan, who downgraded Avon to ‘hold.’ ‘Look, the buck stops with me,’ replied Jung, who has been chief executive officer since 1999 and chairman since 2001.”
“Under Jung, Avon has turned in poor performances in key markets such as Brazil and Russia, poured tens of millions of dollars into its international bribery investigation and struggled to stem declines in a sluggish U.S. market,” Wohl reports. “New York-based Avon does most of its business outside North America. Other markets accounted for nearly 82.2 percent of revenue and 98.4 percent of profit in the third quarter.”
Wohl reports, “Avon said on Thursday that it received the subpoena from the U.S. Securities and Exchange Commission on Wednesday. The SEC is investigating the company’s contact during 2010 and 2011 with certain analysts and other representatives of the financial community, Avon said in its quarterly filing… The SEC issued a formal order of investigation of both Regulation FD matters and the Foreign Corrupt Practices Act matter that Avon itself has been looking at since June 2008.”
Wohl reports, “Jung, a magna cum laude graduate of Princeton University, was ranked sixth on Fortune magazine’s list of powerful women in U.S. business in September. She co-leads the seven-member board at Apple Inc and chairs its compensation committee. When announcing her nomination to Apple’s board in 2008, Steve Jobs referred to Jung as a ‘strong CEO and marketer.’ She has also served on General Electric Co’s board since 1998 and serves on two of its committees: nominating and corporate governance and management development and compensation. A GE spokesman said the company is not reviewing her position as a director, while an Apple spokesman did not immediately return a call for comment.”
Read more in the full article here.
[Thanks to MacDailyNews Reader “krquet” for the heads up.]