Avon Puts Up for Sale Giorgio, Parfums Stern

Avon Products on Friday put up for sale Giorgio Beverly Hills and Parfums Stern, the booming prestige fragrance subsidiaries that it bought with much fanfare in 1987.

Proceeds from a sale would be used to reduce Avon’s $1-billion debt, much of which was incurred after an ill-fated diversification four years ago into health-care businesses, spokesman John Cox said.

Diana K. Temple, an analyst with Salomon Bros. in New York, speculated that Avon could get $400 million for the two units, which have four of the top 10 selling fragrances in the United States: Giorgio Beverly Hills, Red from Giorgio Beverly Hills, Oscar de la Renta and Uninhibited by Cher. Other brands include Perry Ellis, Valentino and Deneuve.

Giorgio and Parfums Stern had sales last year of $228 million and profits before interest payments and taxes of $18 million. In May, Avon projected that the units’ sales would rise to $326 million and that profit would double to $36 million.

At that time, Avon told analysts that it was considering several ways to reduce its debt, including the possibility of selling the prestige fragrance businesses.

Cox emphasized that Avon has not formally decided to sell the units but rather has hired the investment banking firm of Morgan Stanley & Co. to evaluate offers.

He declined to comment on speculation that Michael Gould, 46, president and chief executive of the units, might attempt a management buyout.

Gould, based in Giorgio Beverly Hills’ Santa Monica headquarters, was in London and could not be reached for comment.