After more than 100 years of making beauty products in the U.S., Avon is selling its last domestic factory to a French cosmetics manufacturer.
Fareva Group will take over production of lipstick, body lotion, face cream and other products at Avon’s factory and warehouse in Morton Grove, Ill., people familiar with the plan said. The contract manufacturer also will make private-label products for drugstore chain Walgreens Boots Alliance Inc. at the underutilized, 500,000-square-foot plant, one of the people said.
Financial terms couldn’t be learned. Current Avon employees are expected to keep their jobs as part of the ownership change, the person said. Avon employed 362 in Morton Grove in 2016, according to the northern Chicago suburb’s records.
The deal comes less than three years after New Avon LLC, formerly the North American arm of Avon Products Inc., AVP 1.23% split from the larger company as part of a deal with private-equity firm Cerberus Capital Management LP. Cerberus bought a 17% stake in the parent company and acquired 80% of New Avon, which separated the unprofitable division from Avon’s international business.
Avon, one of the nation’s biggest direct sellers with around 200,000 representatives in North America, has lost thousands of door-to-door salespeople over the years as the company failed to modernize its products, develop an online strategy or capitalize on social media. The company already sells a slew of products, from clothing to housewares, made by outside suppliers.
Cerberus installed a consumer-products veteran as CEO and has been working to turn around the company, slashing costs and overhauling the company’s strategy by trimming product offerings and getting into the health and supplement business.
Avon had three U.S. factories at its peak. It closed its Suffern, N.Y., plant in 2002 and shed its Springdale, Ohio, factory a decade later, leaving only the plant in Morton Grove.
In Morton Grove, Avon employs less than one-third of the workers it did in 2015, when the village’s records say 1,200 people worked at the company, making it the largest employer. Avon remains the town’s third-largest employer.
Morton Grove Village Administrator Ralph Czerwinski said the factory remains important to the local economy. He hadn’t heard about plans to sell the factory to Fareva, adding “I hope they are able to keep the plant going.”
An Avon spokeswoman said the company chose Fareva to take over production because “they are one of the top beauty development houses in the world.”
A contract manufacturer with roughly 12,000 employees globally, Fareva makes cosmetics, pharmaceutical and industrial and household products. The company entered the U.S. in 2011 by buying a Pfizer Inc. factory and taking over production of over-the-counter products such as ChapStick, Robitussin cold medicine and children’s Advil.
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