Avon buys jeweler to expand offerings

Avon will make a potential additional payment in early 2015 to current Silpada shareholders if earnings growth targets are achieved, New York-based Avon said yesterday. The purchase may add 3 to 5 cents a share in 2011 profit.

Chief executive Andrea Jung has pursued acquisitions to expand beyond beauty products, which accounted for more than 70 percent of Avon’s $10 billion in sales last year. Closely held Silpada, with operations in the United States, Canada, and the United Kingdom, gives Avon control of the largest and fastest-growing direct seller of sterling silver jewelry.

Silpada has annual sales of about $230 million, and most of its jewelry pieces sell for more than Avon’s current products. In February, Avon’s chief financial officer, Chuck Cramb, called jewelry a “$100 billion mass market opportunity.’’

Avon plans to fund the purchase with cash on hand and commercial paper. The company had $1.12 billion in cash and cash equivalents as of March 31.

Silpada of Lenexa, Kan., will keep operating as a stand-alone business with its 32,000 independent sales representatives, who invite customers to at-home product-demonstration parties.

Avon’s fashion unit products, which include jewelry, watches, and footwear, accounted for about 17 percent of total sales in 2009. The company sells makeup and other items in more than 100 countries through about 6.2 million independent sales representatives.