Avon Products Inc. (AVP), the door-to-door cosmetics retailer, agreed to sell its Silpada Designs jewelry unit to Rhinestone Holdings Inc. for $85 million in cash, about one-seventh the amount it paid to buy the company in 2010.
The agreement also includes an earn-out payment of as much as $15 million if Silpada meets certain profit targets over a two-year period, the New York-based makeup company said today in a statement. Avon said it expects to take an $80 million pretax, noncash charge on the estimated loss from the sale. Rhinestone is a new company created by Silpada’s founders.
Avon said in February it was looking for alternatives for the unit as Chief Executive Officer Sheri McCoy tries to stabilize the company after four years of declining profit.
Avon bought Silpada in July 2010 for about $650 million to broaden its product line. Sales at the time of purchase were about $230 million a year, compared with $155 million last year. McCoy, a former Johnson & Johnson executive, took over last year from Andrea Jung.
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