Foundation and sale of books (1886-1939)
Avon was founded in 1886 by David H. McConnell in New York as the “California Perfume Company.” Initially, McConnell sold books, but after noticing the success of the perfumes he gave away, he decided to change business and focus on cosmetics. Just as you read.
McConnell began his business selling books door-to-door, giving away a fragrance of his own creation for every book purchased. The fragrances became so popular that over time many women would buy books in order to obtain the prized perfumes.
As the company grew, the idea of hiring representatives to promote the perfumes arose. The first representative of the company was Florence Albee.
June Young, an Avon saleswoman, carries a bag of Avon cosmetics and an Avon teddy bear as she knocks on doors while making house-to-house sales calls. (Photo by Acey Harper/Getty Images) (Acey Harper/Getty Images)
In 1896, McConnell built a laboratory in Suffern, New York, which would later become the Avon Research and Development Center.
In 1918, five million units of cosmetics were sold in the United States. By 1928, sales reached $2 million. In October 1936, Avon Products, Inc. was officially founded. The name was taken from the city where Shakespeare was born, for whom McConnell greatly admired.
Global expansion and success in the 20th century (1940-1990)
Megan Ver Steeg applies blush with a sponge to the face of Alyssa Romberg, 14, while Lexie Buccowich, right, 14, looks at a catalog for Mark’s cosmetics line in 2004, when the brand focused on products specifically for teenagers. (Anne Cusack/Los Angeles Times via Getty Images)
In 1946, Avon was listed on the New York Stock Exchange. Throughout the 20th century, Avon expanded globally, establishing itself as a leader in direct sales of cosmetics. Its door-to-door sales model made it an icon of the industry.
In fact, in 1957 Avon surpassed the $100 million sales mark for the first time and the number of its representatives increased to 100,000 in various parts of the world.
Challenges and Restructuring (1990-2010)
Since the 1990s, Avon has faced increasing competition, changing consumer habits and legal problems, including sanctions for bribery abroad. Although it attempted several restructurings, the company failed to adapt to digitalisation and new market dynamics.
Decline and Acquisition (2010-2020)
In 2020, Avon was acquired by Natura & Co., a Brazilian conglomerate, in a transaction that valued Avon at $2 billion. The purchase was driven by Avon’s financial decline and Natura’s desire to strengthen its presence in emerging markets such as Latin America. Avon was delisted from the stock exchange.
Under Natura’s leadership, the brand sought to modernize by digitizing and integrating its operations in Latin America.
Closing of its century-old laboratory
In 2022, Avon announced the closure of its century-old Avon Research and Development Laboratory in Suffern in order to restructure its costs and move its R&D efforts to Brazil and Poland, two of the largest markets for its business.
The company said part of its strategy was to offer aspirational beauty at an irresistible value through a high-touch, omnichannel relationship selling model. Locating R&D in key Avon markets will enable closer connections with representatives and consumers and build integrated communities with its supply chain operations and with Natura in Brazil, locating R&D at the Cajamar site.
Bankruptcy in the United States (2024)
In August 2024, Avon Products (API), a subsidiary of Avon in the United States, filed for Chapter 11 bankruptcy protection due to its high debt. Natura, as its largest creditor, supported the move, committing to fund the restructuring and acquire the non-U.S. operations for $125 million.
This move affected Natura’s finances, which recorded a net loss of R$859 million in the second quarter of 2024. Despite this challenge, the firm continues to focus on integrating Avon in Latin America and improving its performance in key markets such as Brazil and Mexico.
Chapter 11 allows bankrupt companies to restructure their finances and operations, with the opportunity to pause debt payments to their creditors. And, therefore, this process does not affect Avon sellers in other parts of the world, that is, those who still offer these products through catalogues in countries such as Mexico or Colombia.
Cancer Case Lawsuits
Avon Products, now a subsidiary of Natura, is facing a Chapter 11 bankruptcy case in the United States, fueled by nearly 400 lawsuits alleging that some of its talcum powder products contained asbestos, causing cancer in consumers. At a recent hearing, it was argued that the process should be slowed down to allow victims to form a committee to represent them and study any proposed payment plan.
Judge Craig Goldblatt made no decision on the formation of such a committee. Under the law, if the U.S. Trustee’s Office does not appoint a committee, victims could ask the judge to intervene. Avon Products was approved to borrow $12 million from its parent to cover restructuring costs, with the possibility of requesting more funds in the future.
The bankruptcy is due in part to the accumulation of lawsuits and the lack of liquidity to resolve them, aggravated by the impact of the pandemic. Avon has spent $225 million on litigation and settlements related to these lawsuits.
The company has $1.3 billion in debt, mostly to Natura, and will seek to sell its assets during the bankruptcy process. Natura has offered to buy these assets for $125 million, in addition to canceling $530 million of debt and providing an additional $43 million to fund the bankruptcy.
It is worth noting that the ‘American version of Avon’, now owned by LG Household & Health Care Ltd., is not involved in this bankruptcy process.
