Archive for Wednesday, July 3, 2013

Silpada founders buy company back from Avon

July 3, 2013


— Beauty products company Avon is selling the jewelry business Silpada back to its co-founders and their families for $85 million, well below what it paid three years ago.

Avon announced earlier this year that it was reviewing strategic options for the business, which sells sterling silver jewelry at home parties. Avon purchased Silpada Designs in July 2010 for $650 million.

Avon has been struggling at home and abroad as weak sales have hurt its profitability. The company has also wrestled with a bribery probe in China that began in 2008 and has since spread to other countries.

CEO Sheri McCoy is leading the company in a turnaround plan to cut costs, leave unprofitable markets and streamline its operations with the goal of achieving revenue growth in the mid-single-digit percentage and $400 million in cost savings by 2016.

The families of Silpada co-founders Jerry and Bonnie Kelly and Tom and Teresa Walsh, through their company Rhinestone Holdings Inc., were the highest bidders in an auction process for the business.

Avon said in a regulatory filing on Tuesday that the transaction also includes up to $15 million more if Silpada hits certain earnings targets over the next two years.

Avon Products Inc. anticipates taking a charge before taxes of about $80 million in the second-quarter tied to the sale. It expects to use the sale’s proceeds for general corporate purposes, including repaying outstanding debt.

Silpada said late Tuesday that Kelsey Perry and Ryane Delka, daughters of the Walsh and Kelly families respectively, will serve as co-presidents. Perry most recently served as Silpada’s brand merchandising manager, while Delka was previously the company’s vice president of sales, development and training.

Jerry Kelly will remain as CEO, and he and Tom Walsh will serve as co-chairmen. Bonnie Kelly, Teresa Walsh, Delka and Perry will also serve as board members.

The Walshes have Kansas University connections. Tom Walsh is a KU alumnus. The couple and their family’s foundation made a $2 million donation to the Kansas University Cancer Center in 2011.

Silpada has more than 300 workers in the U.S. and Canada. The company’s international corporate headquarters and distribution center will stay in Lenexa, Kan. There are currently no plans to move its Canadian headquarters in Mississauga, Ontario.


Matthew Herbert 4 years, 11 months ago

Silpada is NOT sterlng silver jewelry, it is plated silver crap, which by definition cannot truly be called "sterling". Cheap crap.

verity 4 years, 11 months ago

In my opinion, companies like Avon should stick with what they do best and particularly not add cheap junk merchandise. They should concentrate on upgrading their make-up/body products line and go back to giving samples the way they used to. They have a few products I really like and don't find elsewhere, but I have thrown away a lot of Avon products.

Alpenglow 4 years, 11 months ago

Silpada is ridiculously priced. Never again when I attend a Silpada party just to help out the hostess with a purchase. You can get jewelry just as nice at a fraction of the cost at Charming Charlie.

Lori Nation 4 years, 11 months ago

It is not sterling silver jewelry. Plus you can go to Kohls or other department stores for way better stuff at a cheaper price. Never again will I buy Silpada it breaks or falls apart doesn't last as long as the costume jewelry from department stores.

Kelly Anderson 4 years, 11 months ago

Yes it is sterling silver. It is not plated. All of the items are guaranteed. If it breaks or falls apart you can exchange or replace it with something similar. I have numorous pieces and have had issues with some and just contacted my rep and it was replaced within a week. Love their jewelry and in fact get most of my items free or extremely discounted by having parties.

Matthew Herbert 4 years, 11 months ago

Say what you will about the "quality" of this jewelry, but the proof is in the reality of how a company loses $600 million in 3 years.

Lori Nation 4 years, 11 months ago

Take it to a jeweler or better yet clean it sterling silver cleaner IT IS NOT REAL SILVER. And as far as replacing you have to make sure you have proof of buying it. I would rather pay cheap to get cheap jewelry like theirs and have it last longer than theirs. I have pieces from Walmart, Kohls, JcPennys that lasted longer and look better and cheaper in cost.

Commenting has been disabled for this item.