Avon Products Inc.'s stock erased a big early gain to close down 1.5% Thursday, after one major shareholder expressed disappointment over the troubled beauty products company's plan to sell a large stake in the company at such low prices. The stock soared as much as 17% within minutes of the opening bell, after Avon said it sold a near 17% ownership stake in the company to turnaround specialist Cerberus Capital Management, but then traded steadily lower throughout the day. James Mitarotonda, chief executive of private-equity firm Barington Capital Group, which owns a more than 3% stake in Avon, said the fact that the large stake was sold off at what he believes are "fire sale" prices suggests management doesn't recognize the value of Avon's brand. He was even more upset that the company didn't oust its CEO, who he has recently blamed for the company's troubles. "While we are pleased that six existing board members have agreed to step down, we are astonished that Sheri McCoy remains as CEO," Mitarotonda said in an emailed statement to MarketWatch. The stock has lost 57% year to date, and 81% since April 2012, when McCoy was hired as CEO.
Copyright © 2015 MarketWatch, Inc.
Continue Reading Below