Avon Puts Tiffany Up for Grabs

When Avon, the queen of door-to-door cosmetics, bought Tiffany, the Fifth Avenue squire, in 1979 for $104 million, Wall Street's wise old hands wondered how the marriage would work. It did not. Last week Avon asked Morgan Stanley, its investment banker, to find a buyer for Tiffany.

Avon put up an additional $53 million to modernize and expand the Tiffany operation, but the famous seller of tasteful baubles to the wealthy never lived up to expectations, says Analyst Diana Temple of Salomon Brothers. When Avon bought the company, its profits were $5.7 million on sales of $72 million. Sales have gone up sharply since then, but profits have had nowhere near the same gain. Last year Tiffany earned only $8.1 million on sales of $124.6 million, and it actually lost money during the first quarter of this year.

Avon wants at least $157 million for Tiffany, but Analyst Temple guesses the price will be closer to $100 million. So far, about 25 potential buyers are looking at the shiny merchandise.