Shares of Avon Products (AVP) plunged in morning trading after the cosmetics company reported a surprise quarterly loss. Additionally, the company, which has been under pressure from activist investors, said its chief executive officer will step down next year.

QUARTERLY EARNINGS: Avon reported an adjusted loss per share of (3c) for the second quarter, well below analysts' consensus estimates of 7c in profits per share. Quarterly revenue of $1.4B was roughly in line with the $1.44B consensus but declined 3% from the year-ago period. The company said active representatives and ending representatives declined 3% and 2%, respectively. Looking ahead, Avon said it expects fiscal 2017 constant-dollar revenue growth in the low single-digits, Adjusted operating margin expansion of 100-140 basis points over last year and "slightly positive" free cash flow including an expected $65M in increased capital expenditures. However, based on the Q2 performance, Avon said it expects to be at the low end of its guidance ranges. The company said it is on track to achieve its 2017 cost savings target of $230M. "Second-quarter performance fell below our expectations as we cycled a strong quarter last year. As previously guided, we expect the second half to yield a stronger performance based on our exciting product innovation plans and other initiatives to increase Representative activity," CEO Sheri McCoy said in a statement.

CEO TO TRANSITION OUT: Separately, Avon announced this morning that Sheri McCoy will step down as CEO and as a director on March 31, 2018. Avon has retained Heidrick & Struggles to help it find McCoy's successor. In May, an investor group led by Barington Capital called on Avon's board to begin a search for a new CEO, commenting that McCoy had "overseen a tremendous destruction of shareholder value." At the time, the group noted that Avon's stock price had fallen by more than 80% since appointing McCoy as CEO, with EPS also declining. McCoy, who became Avon's CEO in April 2012, had resisted stepping down despite calls by Barington to do so since 2015. Last year, Avon sold its failing North American business to private equity firm Cerberus Capital and added an independent director to its board as part of an agreement with Barington.

PRICE ACTION: In morning trading, shares of Avon Products are down nearly 12% to $2.96. Shares are down over 40% year-to-date.