Last February, Avon Products Inc. chose the Super Bowl ”“ home to blitzes, bombs and smashmouth aggression ”“ to launch a major ad drive to recruit the home-based agents that sell its cosmetics.
As Avon mulls a headquarters site for its regular workers, it may have another trick play up its sleeve.
Avon could be considering Stamford, Conn., as a candidate location for a consolidation of headquarters functions currently located in New York City, and for a large office it has in Rye. The company is said to be considering also Westchester County as a potential locale.
If sources are hearing such scuttlebutt, it would seem to be a long shot for Connecticut. Only in October, The Real Deal and other New York City outlets published speculation that the company had fixed on 250,000 square feet of space at 777 Third Ave. in New York City as a target location for its headquarters currently at 1251 Avenue of the Americas. Brokers were quick to say other companies were interested in the space, however, and no reports have surfaced since of any Avon interest in the property.
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After Connecticut anted up more than $95 million last month to secure a commitment from Starwood Hotels & Resorts Worldwide Inc. to relocate to Stamford from White Plains, the state made a major statement to tri-state area companies considering a large relocation. Avon has proved receptive to such overtures in the past ”“ in 1995, Avon accepted nearly $7 million in incentives to keep its headquarters in New York City through 2012, at the time a significant concession.
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Earlier this fall, developer Building & Land Technology stated it needed speedy approval for an expansion of a planned office complex in Stamford”™s South End, after an unspecified tenant expressed an interest in obtaining 250,000 square feet of space there. Norwalk-based BLT has not identified the company that expressed interest in that amount of space.
Avon would represent a coup for Fairfield County, which is home to several top-flight consumer products companies, including Diageo North America, Harman International Industries Inc., Nestle Waters North America, Sun Products Corp. and Blyth Inc., which like Avon relies on home-based agents to sell its products.
Avon has held up well in the recession, with third-quarter sales down just 4 percent from a year earlier to under $2.6 billion, a drop the company attributed primarily to the impact of currency rates. Despite a large restructuring program this year, the company”™s profits were down just 30 percent to $156 million.
“If you go back to the worst recessions, there are more casualties (but also) more heroes, or more companies that change quartile or share points, which is harder to do in normal times,” said Andrea Jung, CEO of Avon and a director of Fairfield-based General Electric Co., in a conference call with investors after the close of the third quarter. “Now is the time really to take advantage of all these things. We think we are well capitalized (and) well positioned to capitalize on this moment. We”™ve got a sustainable growth plan that we think has really built a very strong foundation for us to go forward.”
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At the start of the year, Avon used a no-frills Super Bowl commercial to launch a drive to recruit new agent representatives that sell its products, with Jung saying the campaign has produced clear dividends in upping the number and quality of “active” agents selling its products. Avon has also been working to transform its agents”™ business model through the use of Facebook and other social media.
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“We believe we were the original social network (in) 1886 in her home, woman to woman; we moved in the ”™70s and ”™80s with her to the workplace; and now obviously the future of this network is online,” Jung said. “It enables a representative to build and publish her own recruiting website (that) will be fully integrated with her social networking sites like Facebook, and create hundreds of thousands of online points of presence ”¦ She”™s got 100 friends and they see the feed, and those 100 friends ”“ obviously we all know the power of this math ”“ have 100 friends. You end up with again 10,000 views from the same company commercial.”
At the same time, Avon also initiated a restructuring program that to date has lowered its head count by 2,700 positions, including vacant slots it had been looking to fill.
“I cannot foresee another major program in terms of the future,” said Charles Cramb, chief finance and strategy officer for Avon. “I don”™t want to say ”˜never ever”™ but in terms of our view forward, we see nothing that would justify us calling it a program. However, there is a constant turnover mentality that will identify future opportunities to take further costs out, but those opportunities will be funded by the business. There is no need to have another restructuring program.”
Ryan Doran contributed to this report.
