[E-Daily Reporter KYUNG GYEYOUNG ] LG H&H is set to restructure its North American operations by selling The Avon Company, a subsidiary long considered a “troubled asset.”

LG H&H(051900)LG Corp.’s North American subsidiary (LG H&H USA, Inc.) announced on the 24th (local time) that it had signed a share purchase agreement to sell 100% of its stake in its subsidiary, The Avon Company, to Stratford Worldwide. The sale price is $6 million (approximately 8.4 billion won).

In addition, LG H&H’s North American subsidiary decided to convert the 286.3 billion won it had lent to The Avon Company into an equity investment. This is a procedure to settle the internal debt relationship between the two companies; it does not involve a separate cash payment, and there will be no change in equity ownership.

Previously, in 2019, LG H&H acquired The Avon to secure Avon’s North American business rights as a stepping stone for its entry into the North American market. However, The Avon has continued to post net losses since the acquisition and failed to generate synergies. Selling The Avon—which was acquired for 145 billion won—for approximately 8.4 billion won marks a painful misstep for LG H&H.

Taking this sale as an opportunity, LG H&H will pivot its North American business toward “retail and digital-based K-Beauty and wellness brands.” The company plans to realign its business portfolio priorities in response to rapidly changing consumer purchasing patterns and the distribution landscape, and concentrate its resources on brands and channels with high growth potential. The company plans to expand its K-Beauty and wellness brand portfolio and broaden its consumer touchpoints in retail and digital channels, focusing on brands that are growing rapidly in the global market, such as Dr. Groot, Belif, and CNP.

Stratford Worldwide, which is acquiring The Avon, is an affiliate of Regent, a global investment firm that operates Avon International. Regent acquired Avon International last January and is now expanding Avon’s business in major markets outside North America. Following the transaction, Avon’s North American operations will continue under the leadership of Avon International.

An LG H&H official stated, “This decision reflects Avon’s efforts to seek new growth opportunities based on its social selling business model, while LG H&H aims to focus more intently on its brand-centric growth strategy in North America,” adding, “We will accelerate growth by concentrating our resources and capabilities on competitive beauty and wellness brands, primarily through retail and digital channels.”