In this article, we take a look at five of the leading companies’ second quarter figures: Herbalife, Natura &Co, Nu Skin, Tupperware and USANA.

HERBALIFE

Herbalife reported $1.6 billion net sales in the second quarter, up 15% versus Q2 of 2020. This year’s Q2 was also Herbalife’s fourth straight quarter of year-over-year double-digit sales growth.

Five of six regions came up with net sales growth in the quarter with four regions exceeding 20% growth: Asia-Pacific 38%, South & Central America 23%, Mexico 23%, and EMEA 22%. North America reported 7% sales growth and China 17% decilne.

Management told the investors they were disappointed with China’s performance. China represents relatively a small share in Herbalife’s global business (approx. 11%) but company announced they were already taking a number of actions to reverse the situation in this market.

“We delivered double-digit net sales growth for the fourth straight quarter. All three of our core product categories grew double-digits, which includes the Energy, Sports and Fitness category, which increased 45% compared to the prior year,” said John Agwunobi, Chairman and CEO of Herbalife.

Herbalife management declared its sales increase forecast for end-2021 as 8.5 to 12.5%. As Herbalife’s year-over-year first half growth performance currently sits at 17%, this forecast indicates a low growth expectation from the second half.

For more on Herbalife’s second quarter performance, please click here.

NATURA &CO

Natura &Co announced its revenue had increased by 36% in the second quarter of 2021.

Natura &Co Latam reported 39% sales growth, Avon International 34%, The Body Shop 24%, and Aesop 47%. At the country level, Natura business in Brazil grew by 25%, Avon’s by 26% in this country. Additionally, management noted Avon’s performances in Philippines, South Africa, Romania and Italy.

Natura &Co Latam accounted for 58% of the group revenue. Avon International’s share was 23%, The Body Shop’s 13%, and Aesop’s 6%.

With these results, Natura &Co’s first six-month consolidated revenue is 31% higher than what it was in 2020.

Roberto Marques, Executive Chairman and Group CEO, commented, “Natura &Co turned in another strong performance in the second quarter despite a persistently challenging environment, demonstrating again the relevance of our multichannel model, the powerful appeal of our brands and products and unparalleled direct-to-customer reach. All of our brands and businesses posted double-digit growth and we once again outperformed the global CFT market.”

For more on Natura’s second quarter performance, please click here.

NU SKIN

Nu Skin’s second quarter revenue was $704 million, indicating an increase of 15% versus 2020.

Six of its seven regions posted positive growth: EMEA 64%, Americas/Pacific 19%,  South Korea 15%, Southeast Asia 6%, Mainland China 5% and Hong Kong/Taiwan 4%. Japan’s revenue was the same as last year.

With this result, Nu Skin’s first six-month sales performance is 21% higher than 2020.

“Our performance was led by continued growth in our beauty device systems and further adoption of social commerce. In addition, we significantly improved profitability during the quarter, which led to strong earnings per share growth,” said CEO Ritch Wood. Ritch Wood will be transferring the CEO role to current President Ryan Napierski on September 1st.

Nu Skin’s 2021 revenue expectation is $2.81 to $2.87 billion. This is an increase of 9 to 11% compared to 2020.

Looking ahead into 2022, management said they will expand their beauty device system leadership position by introducing next-generation connected devices. This will further enhance the company’s ability to provide consumers with more personalized product experiences to meet their needs, as explained.

For more on Nu Skin’s second quarter performance, please click here.

TUPPERWARE

Tupperware closed the second quarter with $465 million sales, up 17% from last year. This was Tupperware’s fourth consecutive quarter of revenue growth. Company’s average active sales force also increased by 24%.

Second quarter 2021 net sales for the segments were:

Asia Pacific: $124.6 million, down 7%
Europe: $114.4 million, up 26%
North America : $155.8 million, up 26%
South America : $69.9 million, up 45%

From a geographic perspective, Tupperware’s growth was driven by its largest markets. U.S., Canada, Mexico and Brazil contributed more than 80% of the revenue increase, company told.

Miguel Fernandez, President and CEO of Tupperware said, “The double digit sales growth reflects our initial investments and numerous initiatives to create long-term sustainable growth in our core direct selling business. We are increasing our investments in talent across operations, digital, finance and market leadership to prepare for future business expansion into new channels.”

Following expanding into Honduras and Panama, management is hopeful to open U.K. before the end of this year. Tupperware intends first, to retail or direct-to-consumer through TV channels in the U.K. Direct selling will be the last channel in this market.

For more on Tupperware’s second quarter performance, please click here.

USANA

USANA reported an impressive 30% revenue increase in the second quarter of this year versus Q2 of 2020. Company’s first half 2021 sales growth is also up 23%.

USANA’s all four regions came up with double-digit quarterly sales figures: North Asia 45%, Greater China 33%, Southeast Asia Pacific 28%, and Americas & Europe 19%.

CEO Kevin Guest said, “Strong consumer demand for our high-quality health products, coupled with the execution of our previously announced short-term sales program, contributed to our record net sales and customer numbers for the second quarter.”

Following the seacond quarter, USANA management reiterated its net sales forecast for the full year of 2021 as $1.24 – $1.28 billion.

During the investors’ call, the dichotomy between having a very strong second quarter but no change in the full year outlook was asked about. This would mean a serious  slowdown in the rest of 2021. Management said the sharp increase in Q2 was mainly due to the sales program that was short-term in nature.

For more on USANA’s second quarter performance, please click here.

…..

Hakki Ozmorali is the Founder of WDS Consultancy, a management consulting and online publishing firm in Canada, specialized in providing services to direct selling firms. WDS Consultancy is a Supplier Member of the Canada DSA. It is the publisher of The World of Direct Selling, global industry’s leading weekly online publication since 2010. Hakki is an experienced professional with a strong background in direct sales. His work experiences in direct selling include Country and Regional Manager roles at various multinationals. You can contact Hakki here.

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The post Q2: Once Again, Remarkable Growth Figures appeared first on The World of Direct Selling.

I have the pleasure of personally knowing Angela for several years, and now I am more than delighted to have her on our blog.

Could you tell us about your education?

For me there is an ongoing process of learning with every new interaction, with every new experience, both from failure and success. I keep myself fit by updating my knowledge with new information every day. My formal education is in economic cybernetics and management postgraduate studies.

What was your childhood dream?

I had many dreams, they kept me learning, kept me moving ahead. I grew up in communism, a pretty restrictive environment, therefore my first dreams were around being free to travel and later I was aspiring to being free to express myself, to create and share value under a strong purpose. With every new chapter of my life, my dreams evolved from very tangible to more intangible goals.

What were your past experiences before your current role at Avon?

I am an experienced global executive, leader of emerging and developed markets cross four continents and enabler of multiple end-to end business transformations and digital social selling innovations at global scale. I worked in direct sales for more than 20 years, starting from being a area sales manager to opening new markets, from leading one country to managing regional and then global portfolio of countries.



What do you attribute your career success to most?

What success is for you?  Is it a year of amazing career plan achievements or is it living feeling fully engaged with your life? To me success means being happy with my everyday life, having a strong sense of purpose, having a compass. Luckily enough, I learned quite early to never take my business card title as my goal or even worst, as my identity.

I take and share energy from being an enabler, connector and multiplier to my stakeholders. I am a keen advocate of empowering women and I have had a fascinating, rewarding life experience so far. If you would agree that success means living with intensity and enjoying every moment with those around you, then I had been already successful for a long time before getting any business titles, and I owe this freedom of mind to all the inspirational women I’ve met, from Africa to Middle East, from Asia to Americas.

What has been your most inspiring moment?

I have been through many life intense experiences that have enriched my gratitude, humility and sense of purpose. From witnessing women thriving through outstandingly difficult conditions, cheering for others gaining their financial independence, to holding hands, praying together with breast cancer survivors, I understood that so many of us we waste critical energy on trivial things. Life is gently guiding us to see our meaning, hopefully earlier than too late. The most exciting moment though was personally helping a domestic violence survivor to redefine her life in her own terms.

Your hobbies?

Learning, skiing, weightlifting, silly, funny chats with my family and friends

How would you describe being a direct selling executive to an outsider?

High touch shopping experience for customers, meaningful earning experience for the advisors/promoters – a truly relationship selling model – the past and future of commerce.

What is your biggest achievement at Avon?

Enabling people achieving their potential and maximizing their impact.

And your biggest challenge at a direct selling company executive role?

Keeping the speed in the evolution of the business model to retain high-tech/high touch/high impact.

What would be your best advice to those who are thinking of joining a direct sales company at a corporate position?

Keep humble and curious, connect to people and learn from them every day. People are the most precious enablers of success. They are not human resources executing guidance, they are multipliers of the purpose they believe in.

Click here to read about the executives previously appeared on The World of Direct Selling.

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The post Executive Q&A: Angela Cretu, CEO of Avon appeared first on The World of Direct Selling.

HERBALIFE

Herbalife came up with a solid 8% revenue growth in the first quarter, increasing its quarterly sales to $1,262 billion. Maybe the most striking performance was from its China region that posted 26% growth. Sales in Asia-Pacific increased by 12%, in North America 8%, and in EMEA 3%.

In the U.S., the first quarter and the month of March were all-time record highs for Herbalife.

Management said it owed the postive results in China to the strategy change the company made in this market after last year’s “100-day review of the health products industry”. Then, Herbalife had decided to be less reliant on large in-person meetings. And therefore, it created a robust e-commerce platform and moved many of the sales meetings online. Eventually, “this has proven to be extremely helpful during the pandemic”, Herbalife stated.

Despite the positive results in the first quarter, management announced the pandemic’s impact on the results in the second quarter and also on full year 2020. So, “the company would periodically reassess its ability to provide guidance for full year 2020 as and when the impact of the pandemic could be reasonably estimated”. In fact, Herbalife’s global growth was in a decline last April by nearly 1%. While China and the U.S. were up 20% and 14%, India and Brazil were down 30% and 31%, respectively.

For more on Herbalife’s first quarter performance, please click here.



NATURA &CO

As we all know by now, Natura had added Avon to its portfolio last year and Avon was included in Natura’s consolidated figures for the first time in Q1 2020. With the addition of Avon, Natura &Co became the leading beauty company in Latin America, with 11.8% market share, as reported by the management

The group’s consolidated revenue in Q1 2020 was R$7,518 b (approx. US$1.3 billion). This was up 2% versus prior year. Within this, Natura &Co Latam recorded 2% growth. The Body Shop’s revenue increase was 3% and Aesop’s 27%. Avon International, once again, reported a sales decline: -2%.

Although too early, Natura management has so far been satisfied with Avon’s results.  “The rapid progress in integration” has led the company to raise its total synergy target to US$300 million to US$400 million over the next four years. This total synergy target has four pillars: Sourcing, manufacturing and distributon, administrative and revenue.

“Natura &Co Latam” unit brings 55% of the group’s global business, Avon Internatioal 28%, and The Body Shop 11%. Aesop, the unit that announced the highest percentage-wise growth, contributes 5%. As a side note, Avon’s Latin America business is included in “Natura &Co Latam”, together with The Body Shop’s and Aesop’s LATAM units.

Roberto Marques, Chairman and CEO, declared: “The first quarter of 2020 is the first to include Avon in our scope. We are very pleased by the rapid progress that has been made in integrating the company. This is more notable in that we have achieved this in the midst of the unprecedented global health crisis caused by the spread of the Covid-19 pandemic, which impacted our Q1 performance. In the face of the pandemic, the Group took quick action to adapt to this crisis, with three key priorities: Care for our people, care for our communities and care for our company.”

For more on Natura & Co’s first quarter performance, please click here.

NU SKIN

Nu Skin reported 17% revenue decrease in the first quarter versus last year’s same period ($518 m vs. $624 m). Company’s all business units contributed to this decline, China being on top of the list (-34%). Then came EMEA (-15%), and Americas/Pacific (-14%).

While the business in China was considerably down over previous year, management said it performed slightly better than they had anticipated. On the other hand, while South Korea performed mostly in line with the company expectations in Q1, the anticipation is that the effects of COVID-19 to be more impactful in the second quarter. South Korea represents about 15% of Nu Skin’s global revenue.

Commenting on the results CEO Ritch Wood said, “Our first quarter results demonstrated continued stability in the Nu Skin business with strong customer activity. More than 80 percent of our revenue comes through our digital properties which have been enhanced by our strategic investments in technology infrastructure and digital tools. Additionally, our manufacturing and supply chain investments have enabled us to effectively manage inventory and fulfill customer orders worldwide through very challenging circumstances.”

During the earnings call with the investors, the company also announced its plan to launch a new digital tool called “VERA”. This tool is to leverage artificial intelligence and machine learning to provide personalized product recommendations.

Nu Skin expects $520 to $550 million revenue in the second quarter. For the whole of 2020, the expectation is $2.17 to $2.26 billion. This is significantly lower than its 2019 sales (was $2.420 b).

For more on Nu Skin’s first quarter performance, please click here.

ORIFLAME

Oriflame reported 2% decline in its sales in the first quarter of 2020 as compared to last year (EUR 303 m vs. EUR 309 m).

The decrease in sales was mainly due to Asia and Europe offset by positive development in Latin America, Turkey & Africa and CIS. In fact, Asia (-13%), and Europe (-7%) were the two business units that came up with negative figures. Each of CIS (+11%), Latin America (+4%) and Asia & Africa (+4%) reported growth.

Oriflame’s independent consultants in the quarter remained almost stable at 2.8m (2.9m) on the field. Conpany’s unit sales decreased by 9% and the price/mix effect was positive 6%.

“During the quarter our ability to conduct physical meetings and conferences was affected and we also faced challenges in parts of the supply chain.Under these circumstances I am of course pleased that we today offer our Independent Beauty Consultants a modern way of social selling, with 96% of all orders being placed online. In addition, focusing on our strategic product categories has proven successful with wellness showing the largest sales increase in the quarter,” commented CEO Magnus Brannstrom. Wellness category deserved this special mention as its share showed a substantial increase last quarter: From 12% to 15%.

Besides 96% of the company’s global orders were online, during the first quarter mobile use was 79% (73%) of total sessions on Oriflame’s web sites and orders placed using mobile devices were 56% (47%). The total share of orders processed through the Oriflame app was 33%.

For more on Oriflame’s first quarter performance, please click here.

TUPPERWARE

Since 2013, Tupperware’ numbers have been in a downward trend. Looking back, this is quite a long time but until now, not much could have been changed. This eventually led to several changes at the top management which so far have not produced any substantial achievements. The most recent such appointment was Avon Italy General Manager Marco Brandolini’s to lead Tupperware EMEA.

At its peak, Tupperware’s annual sales was $2.672 B in 2013 and it came down to $1.798 B in 2019. In additon to this 30+% decline, management reported an additional sales decrease in the first quarter of 2020: -23% versus Q1 2019.

Tupperware shares were being traded at $67-68 at the end of 2013. This is now $2-3!

Obviously, the pandemic has only added to Tupperware’s existing problems. During the first quarter of 2020, the impact of COVID-19 on the company’s business was most pronounced in Europe and Asia Pacific, the management reported. Tupperware experienced partial or country-wide lockdowns in various markets in these regions, including China, France, Italy, and Philippines. That said, all regions contributed significantly to the sales decline as shown on the table to the right. Tupperware’s global active sales force was also down 15% in the first quarter.

Miguel Fernandez, President and CEO said, “Our top priorities are to protect the well-being of our employees and sales force, and to support our operations through the unprecedented challenges we face today.”

“Due to the material uncertainty of the duration and extent of the COVID-19 pandemic impact”, Tupperware management withdrew its full year 2020 outlook it had provided in February 2020.

For more on Tupperware’s first quarter performance, please click here.



USANA

As opposed to Tuppeware’s 23% revenue decline in Q1, USANA’s was more than acceptable, given the situation in the world: -2%.

The worst decrease was in China (-9%), Americas & Europe also reported a decline (-2%). Sales in North Asia grew by 23% and in Southeast Asia Pacific by 4%.

“Although COVID-19 in general, negatively impacted our business during the quarter, strong consumer demand for our high-quality, essential, health products and successful promotions helped us deliver operating results moderately ahead of our expectations. Importantly, our manufacturing facilities in the U.S. and China remain fully operational to date, and we have experienced no meaningful disruptions to our world-wide supply chain,” CEO Kevin Guest commented.

USANA had been in a very positive trend for several years until 2019 (it posted 11% revenue decline). Even with this, company’s 10-year compounded annual sales growth (CAGR) was 9%.

For 2020, USANA revised its revenue expectations to be between $1.00 – $1.08 billion (was $1.03 – $1.13 billion). This figure, if achieved, will be similar to company’s 2016 performance. As for the quarter we are in, management said the target was $250 million.

For more on USANA’s first quarter performance, please click here.

The general expectation is that things will be more difficult in the second quarter (and possibly, in the remaining of 2020). We will all see to what extent the industry will be able to adapt to the “new normal” and bounce back.

…..

Hakki Ozmorali is the Principal of WDS Consultancy, a management consulting and online publishing firm in Canada, specialized in providing services to direct selling firms. WDS Consultancy is a Supplier Member of the Canada DSA. It is the publisher of The World of Direct Selling, global industry’s leading weekly online publication since 2010. Hakki is an experienced professional with a strong background in direct sales. His work experiences in direct selling include Country and Regional Manager roles at various multinationals. You can contact Hakki here.

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The post Mixed Growth Performances in the First Quarter appeared first on The World of Direct Selling.

This week’s featured article is a brief compilation of industry news of significance from 2019. As you scroll down, I am sure you will agree with me that it was most certainly another exciting year for the industry with all the positives and the negatives.

I have also included articles from The World of Direct Selling that attracted much interest last year.

> Herbalife CEO Richard Goudis Resigns Over Comments He Made Before Taking the Job
> New Avon Names Laurie Ann Goldman CEO
> Stella & Dot to Exit European Market
> China Launches Campaign to Regulate Health Product Market
> Nerium Gets New Name
> Jeunesse Posts Record Year with $1.46B in Annual Sales
> Mary Kay Celebrates 50 Years of an American Icon – the Mary Kay Pink Cadillac
> LuLaRoe Founders Accused of Hiding Millions to Avoid Creditors

Most-Read Article in January on The World of Direct Selling:
What Direct Sellers Can Learn from the Corporate Training Industry (Vince Han)

> Amway Reports Sales of $8.8 Billion USD in 2018
> USANA Posts Another Sales Increase as China’s Direct Selling Clampdown Looms
> Avon Sees Revenues Decrease in Q4, Full Year 2018
> Herbalife Neared $5 billion Mark in 2018; Waits for Other Shoe to Drop in Goudis/China Probe
> Medifast Announces 87% Revenue Increase in Q4 and 66% for the Full Year
> Nu Skin Expands to Peru
> Skin Care Billionaires Rodan and Fields Return to the Teen Acne Market

Most-Read Article in February on The World of Direct Selling:
The 7 Giants’ 2018 Growth Review (Hakki Ozmorali)

> Fact or Fiction? Let’s Set the Record Straight – US DSA President
> Brazil’s Natura and Avon Confirm Deal Talks
> Nature’s Sunshine Reports $365 Million Sales for 2018, Up 7%
> Tupperware Parties: Suburban Women’s Plastic Path to Empowerment
> Two Mary Kay Executives Make Black Enterprise’s 2019 Most Powerful Women List
> Why Direct Sales Appeals to So Many Moms

Most-Read Article in March on The World of Direct Selling:
Common Pitfalls that Prevent Profitability in Direct Selling Start Ups (Dan Murphy)

> DSN Announces the 2019 Global 100
> Young Living Celebrates 25 Years of Global Growth
> Amway Disrupts Its Own Beauty Business, Launching 50 New Mobile Apps
> More Than 100 LuLaRoe Sellers Have Filed for Bankruptcy
> How Blake Mallen Capitalized on the Gig Economy Before It Was a Thing
> Brazilian Cosmetics Giant in ‘Advanced Talks’ with Avon
> Mary Kay Recognized by Forbes as One of America’s Best Midsize Employers 2019

Most-Read Article in April on The World of Direct Selling:
Marketing’s New Role to Keep A Direct Selling Company Relevant (Jonas Hedberg)

> Oriflame’s Co-Founder Jonas af Jochnick Has Suddenly Passed Away
> Nu Skin Named the World’s #1 At-Home Beauty Device System Brand by Euromonitor
> Tupperware Names CEO Tricia Stitzel Chairman of the Board
> AdvoCare Business Changing
> Founding Family Offers to Buy Out Oriflame
> It’s Official: Natura Buys Avon

Most-Read Article in May on The World of Direct Selling:
AdvoCare Abandons MLM: Uncertainty Returns to Direct Selling (Jeff Babener)

> WFDSA Announces Record-setting 2018 Direct Selling Business Results
> LG to Acquire New Avon North America
> US DSA Announces 2019 Awards Winners and Highest Performing Companies
> Natura’s Avon Acquisition Creates the First Latin American Beauty Powerhouse
> Retail Was Never in Our Plan and It Won’t Happen in Future Also: Frederic Widell, Oriflame VP
> Kirsten Dunst Is Making a Show About a Cult-Like MLM Company
> Amway, the Family Business that Became Global (Google-Translated Text)

Most-Read Article in June on The World of Direct Selling:
2019: The Year Direct Selling As We Know It Changed Forever (Brett Duncan)

> Happi Magazine Announces Top 50 Household and Personal Products Companies
> Canada DSA’s Recipients of the 2019 DSA Awards
> Amway Sues Sellers for Trademark Infringement, Faulty Product Distribution
> As India Hicks Closes Her Luxury Label, Is This the End of Tupperware-Party Shopping?
> USANA: China’s 100-Day Crackdown Has Damaged Consumer Confidence; Sales Drop by 15%
> Mary Kay Champions Business Excellence, Ethics and Social Responsibility, Reaps Rewards in Europe
> Nature’s Sunshine Announces New Global Leadership Structure and Appointments
> Pampered Chef Succeeds in Trademark Infringement Battle

Most-Read Article in July on The World of Direct Selling:
Five Ways the Direct Selling Industry Can Achieve Sustained Growth (Ben Gamse)

> New Amway CEO Shares Digital Vision
> doTERRA CIO Todd Thompson: Social Selling Is Taking off
> Executive Changes at Scentsy
> LG Closes $125M Acquisition of New Avon
> Coty and Younique to Part and Focus on the Development of Their Respective Strengths
> US Direct Selling Association CBD Memo: Ingestible CBD-Infused Products Violate DSA Code of Ethics
> “Tupperware-Style” Retail Makes a Comeback with 27% Growth in UK

Most-Read Article in August on The World of Direct Selling:
Why Are They Leaving Our Company? (Hakki Ozmorali)

> DSA Canada Responds to Globe & Mail Article
> Natura Lands in Asia and Starts Operations in Malaysia
> Tracy Britt Cool to Leave Pampered Chef to Start New Venture
> Rodan + Fields to Launch in Japan
> WorldVentures Expands to Brazil
> Nature’s Sunshine Announces Entry into CBD Market
> MONAT Expands into Europe with Its Launch in Ireland and Poland
> Amazon Challenges Amway, Modicare and Oriflame Ruling in Supreme Court

Most-Read Article in September on The World of Direct Selling:
Natura and Avon: Will This Acquisition Work for Both Sides? (Hakki Ozmorali)

> AdvoCare Will Pay $150 Million To Settle FTC Charges
> FTC v. AdvoCare: Enforcement Action Demonstrates Importance of Compliance Programs
> Uber Is Launching a New App That Matches Freelance Workers with Businesses
> Herbalife Announces CEO Succession Plan
> How Mary Kay China Is Trying to Stay Relevant with Younger Beauty consumers
> Beautycounter Appoints COO and CCO
> Origami Owl CEO Chrissy Weems Explores the Roots of a Successful Business
> USANA Announces Appointment Promotion of Walter Noot to Chief Operating Officer
> Oriflame to Focus on Wellness, Position as Healthy Lifestyle Brand: CEO Magnus Brannstrom

Most-Read Article in October on The World of Direct Selling:
FTC vs. AdvoCare: A Teachable Moment for Direct Selling (Jeff Babener)

> Neora Files Suit Challenging FTC’s Attempt to Change Direct Selling Laws
> Herbalife, Younique, LuLaRoe And Other MLMs Suddenly Under Fire
> LuLaRoe: From Startup to Over $1 Billion in Less Than 4 Years. Lessons and Growing Pains
> Tupperware Appoints Chris O’Leary Interim CEO
> U.S. Charges Two Former Herbalife Executives in China over Bribery Scheme
> UK DSA Announces 2019 Star Award Winners
> Jeunesse Enters Global Essential Oils Market

Most-Read Article in November on The World of Direct Selling:
AdvoCare, Neora, an Ever More Aggressive FTC! What Now? (Alan Luce)

> Kyani Founders Identified as Victims in Plane Crash
> Former New Avon CEO: Company Reneged on $1M Severance
> USANA Announces Retirement of Founder and Chairman, Myron W. Wentz
> Why Market America Is a Legitimate and Thriving Business
> US DSA  2019 Sales and Marketing Conference Reveals New Data on Direct Selling and Independent Work
> The 10 Beauty Brands That Defined the 2010s

Most-Read Article in December on The World of Direct Selling:
5 Keys to Communications Confidence in 2020 (Crayton Webb)

…..

Hakki Ozmorali is the Principal of WDS Consultancy, a management consulting firm in Canada specialized in providing services to direct selling firms. WDS Consultancy is a Supplier Member of the Canada DSA. It is also the publisher of The World of Direct Selling, global industry’s leading weekly online publication since 2010. Hakki is an experienced professional with a strong background in direct sales. His work experiences in direct selling include Country and Regional Manager roles at various multinationals. You can contact Hakki here.

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The post A Year in Review: 2019 in the News appeared first on The World of Direct Selling.

Let’s take a look at these companies’ sales performances one by one…



AVON

Following the third quarter results, Jan Zijderveld, Avon CEO, said, “We continue to execute our Open Up turnaround strategy, with productivity gains driving adjusted operating margin expansion and improved free cash flow… As expected, revenues declined as we continued to make sharper choices designed to drive a healthier, more sustainable and more profitable business.” The four pillars of Avon’s Open Up Strategy is as follows:

In fact, Avon’s global revenue declined by 17% for the quarter versus last year, to $1.2 billion. All four regions reported declines: South Latin America -23%, Asia-Pacific -12%, North Latin America -11%, and EMEA -10%.

During the earnings call with the investors, management said they were focusing on “digital”, saying they had been “kick-starting the development of Avon beauty entrepreneurs as Avon influencers and bloggers to accelerate social selling,” and added, they would “continue to expand new digital tools that enable consumers to shop anywhere, anytime, and improve representative’s experience with better digital tools and training to run her business.”

Avon is aiming to expand its digital reach by initiating a “School of Bloggers” to help Avon’s micro-influencers develop social networks that get them closer to the customers and attract a new generation of representatives.

In 2018, Avon had an 8% reduction in its head count and continued this in the first half of 2019 with a further 15% reduction. As a result, Avon announced it had reduced the total workforce from 25,000 people in 2017-2018 to less than 20,000 today. It also have so far reduced the number of SKUs by 21%.

Earlier this year, it was announced that Natura, the cosmetics giant from Brazil would acquire Avon. This transaction is expected to be finalized early in 2020.

For more on Avon’s third quarter performance, please click here and here.

HERBALIFE

Herbalife’s third quarter net sales of $1.2 billion meant a slight increase (0.1%) compared to the third quarter of 2018.

Asia-Pacific region reported 18% growth in Q3, North America 7%, and EMEA 3%. Sales in China was drastically down by 22%. However, this is still an improvement as the previous quarter revenue growth in China was even worse (-35%). South & Central America and Mexico business units reported declining sales, too (-9% and -4%, respectively).

Commenting on the China market, CEO Michael Johnson said, “As we projected last quarter, the trends in our China business improved in the third quarter and our recovery in that market is on track. The strategies in China are progressing. And we continue to expect further improving trends in the fourth quarter.”

Herbalife management announced their full-year sales outlook as between -1.2% and 0.1% for 2019. For 2020, though, Herbalife aims at growing again (by between 1% and 7%). As you can see on the chart above, Herbalife has not been able to increase its sales in the last five-year period.

In a separate press release following the quarterly results, Herbalife announced its CEO transition plan that would go into effect in March 2020. According to this, Michael Johnson who has been serving as CEO on an interim basis, would remain as the Chairman of the Board, and Co-President and Chief Health and Nutrition Officer John Agwunobi would become the new CEO.

For more on Herbalife’s third quarter performance, please click here and here.

NU SKIN

“Revenue came in slightly below expectation, primarily due to the challenging regulatory environment in Mainland China, where meeting restrictions continued throughout the quarter. Despite this, our sequential sales leader trends stabilized both in China and globally, and recent product introductions and business incentives drove year-over-year increases in customer acquisition,” commented Ritch Wood, CEO of Nu Skin.

Nu Skin reported $590 million revenue in the third quarter which was 13% less than last year same quarter’s figure ($675 million). The highest decrease came from China (-23%), company’s largest region that generates more than 1/3 of its global volume. In the third quarter, Nu Skin’s all regions but Japan (+2%) reported negative growths.

For the whole year, management expects its revenue to be between $2.41b-$2.43b in 2019. This is 9-10% lower than Nu Skin’s 2018 sales.

For more on Nu Skin’s third quarter performance, please click here and here.

TUPPERWARE

Apparently, Tupperware’s difficult times are not over. It reported declining sales for the third quarter in a row this year. The first quarter was -10%, the second was -11%, and this last quarter’s revenue growth performance was -14%.

On the regional level, South America reported -17%, North America -16%, Asia-Pacific -12%, and Europe, also -12%. Tupperware’s active sales force was 546,000, down 8% from last year’s same period.

“Sales for the third quarter ended in line with our forecasted guidance as the challenging trends we’ve been experiencing in Brazil, China, and US and Canada persisted as we expected,” said Tricia Stitzel, company Chairman and CEO. “We understand that we need to live up to the challenges of being a competitive global business and we need to drive rapid improvement. We can and we will,” she added.

As far as the year-end forecast is concerned, the management expects a 12-14% sales decrease as compared to 2018. This will be Tupperware’s lowest yearly sales in more than a decade.

Tupperware shares tanked last Friday, after the company said it would suspend dividends. Tupperware share price is down 67% as compared to beginning of 2019.

For more on Tupperware’s third quarter performance, please click here and here.



USANA

Following the disappointments in the first and the second quarters (7% and 15% declines in sales, respectively), USANA reported a negative growth in the third quarter as well: -12%.  USANA’s total number of actives at the end of the third quarter was 558,000, compared to 615,000 in the prior-year period.

CEO Kevin Guest said, “Although we continue to face a challenging sales environment in China and other regions, we were pleased to see sales in several markets improve on a consecutive quarter basis… We also recognize, however, that we still have work to do in the Southeast Asia Pacific and Americas/Europe regions towards regaining sales momentum.”

All regions contributed to the declining sales in Q3: The largest region China was down 19%, North Asia was again, -17%, Americas & Europe -9%, and Southeast Asia Pacific -8%. China generates more than half of company’s global volume and sales in this region was down 23% in the second quarter, too.

Management announced USANA would be hosting its Annual China Sales Meeting in November. 10,000 people are expected to attend this event in Macau and at this event, the attendees will be offered “a preview USANA’s plans for China in 2020”.

At the end of the quarter the company updated its sales outlook for 2019 as between $1.030 billion and $1.045 billion (was previously between $1.020 and $1.060 billion). This outlook shows USANA’s year-end sales will be less than last year’s ($1.189 billion).

For more on USANA’s third quarter performance, please click here and here.

Click this link for our previous Quarterly Reviews of major direct selling companies.

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Hakki Ozmorali is the Principal of WDS Consultancy, a management consulting and online publishing firm in Canada, specialized in providing services to direct selling firms. WDS Consultancy is a Supplier Member of the Canada DSA. It is the publisher of The World of Direct Selling, global industry’s leading weekly online publication since 2010. Hakki is an experienced professional with a strong background in direct sales. His work experiences in direct selling include Country and Regional Manager roles at various multinationals. You can contact Hakki here.

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Natura was founded in 1969 in Brazil by Luiz Seabra. 27-year-old Seabra founded Natura as a small lab and a cosmetics shop. In the beginning, his intention was traditional retailing.

Five years later, the decision was to go direct selling, following Avon, which had been successfully operating in Brazil for a while.

For eight years after that, Natura remained in its home market direct-selling only in Brazil. 1982 was the year when it went international for the first time, launching in Chile.

Growth

Natura’s sales grew at an amazing 43% compound annual rate between 1979-1989. And in 2004, Natura became the top cosmetics company in Brazil. It has been the market leader since then. To remind, Brazil is a huge cosmetics market, ranking now the third in the world. The same year Natura went public and was listed on the Sao Paulo Stock Exchange.

Natura has been known as a “Brazilian cosmetics direct-seller” rather than an “international company”. The most realistic reason behind this seems to be a combination of “having no compelling economic reason to go abroad and limited managerial resources at home to spare”. Apparently, increasing volume in Brazil made the prospect of investing elsewhere less attractive.

Thus, Natura’s international expansion remained limited to Latin America countries. Even this expansion did not contribute much to Natura’s overall volume. As of end-2018, 71% of its global revenue was still being generated in Brazil. The remaining 29% was coming from its five other markets, namely, Argentina, Mexico, Colombia, Chile and Peru. So, yes, even after so many years, this giant does not have any strong presence in the U.S., Europe or Asia. It has very recently landed in Malaysia as its first market.



The First Two Acquisitions

Aesop

Natura acquired 65% stake in Aesop in 2013 for about US$70 million. Established in Australia in 1987, the cosmetics retailer Aesop was selling skin, hair and body care products. At that time Aesop had 57 retail locations in 8 countries. For a company with an annual revenue of more than US$1.5 billion at the time, this was not a major financial transaction, obviously.

Then in 2016, Natura also bought the remaining 35% of the shares, increasing its ownership to 100%. By that year, Aesop’s retail distribution had grown to 177 stores in 20 countries.

Aesop’s net revenue was about US$260 million in 2018, representing more than a 50%-increase from previous year.

The Body Shop

Natura’s next move in 2017 was a bigger one: The Body Shop was bought for US$1.1 billion from L’Oreal. The Body Shop was established in the UK in 1976 by the late Dame Anita Roddick and had been owned by L’Oreal for the past 11 years before it was bought by Natura.

The Body Shop had over 3,000 stores in 66 countries and it  had been suffering from a steady sales decline over the years. This was due, according to some, to the dilution of its environment-friendly brand image and to the existence of more powerful competitors in the natural beauty market. In 2016, its sales declined by 5%, and its operating profit by 38%.

As of-mid-year 2019, the situation at The Body Shop seems better. That business unit of Natura’s reported 9% revenue increase as compared to the first six months of 2018.

Transformation to “Natura & Co”

Early in 2018, the company announced it had rebranded itself as “Natura & Co”. “The Natura & Co brand embraces the codes and values of three brands which have had different journeys but always shared a common purpose in their commitment to life and the planet,” said Andrea Alvares, VP of Marketing.

Natura, The Body Shop and Aesop, the three companies in the Natura & Co group, would maintain their own strategic agendas, but the group management would expect sharing solutions and seeking synergies.

So, in 2019, while celebrating 50 years of existence, Natura defines itself as “a global, multi-brand and multi-channel group”.



Now, Avon

Then came the breaking news in May this year: Brazil’s Natura announced it had agreed to buy Avon in an all-stock deal valued at about US$2 billion. Including debt, the transaction was valued at US$3.7 billion, the company said. Natura said it had plans to turn Avon around by speeding up Avon’s existing initiatives on e-commerce and development of new products.

Of these three acquisitions, this most recent one is definitely the riskiest. For one thing, it required the highest amount of funds. Natura went to banks that agreed to provide it as much as US$1.6 billion to be used in financing for Avon stocks and for payments that may be required for Avon’s debt.

Secondly, and maybe more importantly, Avon had been the one having the most problems. Its revenue has been constantly declining since 2011, despite several major initiatives taken.

Lastly, it is worth remembering that Cerberus had acquired Avon’s North America unit’s majority shares for US$170 million in 2015.  It sold it for US$125 million this year to LG Household and Healthcare!

Avon has tried many initiatives, including several major top-managerial changes in the last 6-7 years. None of them has so far produced any major positive impact on its growth. We now wait and see if things will be different within the Natura group. If this marriage fails, it could be quite costly for Natura.

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Hakki Ozmorali is the Principal of WDS Consultancy, a management consulting firm in Canada specialized in providing services to direct selling firms. WDS Consultancy is a Supplier Member of the Canada DSA. It is also the publisher of The World of Direct Selling, global industry’s leading weekly online publication since 2010. Hakki is an experienced professional with a strong background in direct sales. His work experiences in direct selling include Country and Regional Manager roles at various multinationals. You can contact Hakki here.

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This week I have the quarterly growth analysis that I have been doing for several years. It focuses on the largest public direct sales companies and as far as I am concerned, gives an insight on the global industry’s direction.

Previously, this analysis had included Oriflame as well, but as this company decided to go private (i.e. its shares would not be traded on the stock exchange) last May, we no longer have access to its public figures.

AVON

Avon’s second quarter revenue was $1,174.8 million, down 13% from 2018 Q2. All of its four regions reported declining sales last quarter: EMEA -15%,  South Latin America -14%,  North Latin America -7%, and Asia-Pacific -4%. Active representatives declined 10%, too, with decreases reported in all regions.

Jan Zijderveld, Avon CEO, said, “We continued to execute our Open Up strategy, with pricing and productivity gains which drove adjusted operating margin expansion and improved free cash flow. Our focus on productivity in the second quarter, including less discounting, more effective incentives, optimizing promotions and more favorable mix, led to a 5% improvement in average representative sales with price/mix up 9%.” This clearly showed management’s focus was on productivity and profitability rather than growth.

Miguel Fernandez, Global President, explained how their focus had been shaping in terms of recruiting new reps. He said, “The previous recruiting narrative that we had in the company for many years was ‘Come to Avon because you’re going to get great products at the best price’. So, in many cases we were recruiting the consumer that was looking for a discount… We’re stepping away from that.”

You will remember that Avon was acquired by Natura, the cosmetics giant of Brazil in last May. This acquisition is expected to be completed by early 2020.

For more on Avon’s second quarter performance, please click here and here.



HERBALIFE

Herbalife reported net sales of $1.2 billion, a decrease of 3.5% compared to the second quarter of 2018. The worst performance came from China: -35%. South & Central America came up with -13%. Remaining four regions of Herbalife reported positive figures: Asia-Pacific 18%, North America 6%, Mexico 3%, and EMEA 1%. Excluding China, its net sales grew 5.4%.

Chairman and CEO Michael Johnson said, “Our second quarter results were within our guidance range. We delivered year-over-year net sales growth in 4 of our 6 regions. We reported year-over-year net sales growth in 8 of our top 10 countries. However, we recognize China is an issue and we have a plan in place that is working.”

Herbalife’s growth expectation for the whole year of 2019 is between -1.7% and +2.8%.  As of mid-2019, Herbalife’s sales is down 2% versus last year.

For more on Herbalife’s second quarter performance, please click here and here.

NATURA

Natura’s consolidate sales was up 10% in the second quarter, reaching R$ 6,319 million (approx. USD 1.6 billion) as of mid-year.

Natura & Co.’s consolidated reporting currently includes Natura, The Body Shop and Aesop. Natura’s own revenue was up 7% in the first half, The Body Shop’s 9%, and Aesop’s 27%.

Commenting on the results, Natura & Co. Chairman Roberto Marques was happy, saying, “All three of our existing brands contributed to this strong performance. Natura posted a sharp improvement in Brazil despite a weak CFT market… The Body Shop’s transformation is advancing. Sales grew despite the closure of underperforming 37 stores… Aesop’s profitable growth continues.” Then, he added the acquisition of Avon was “a decisive step in the creation of a multi-brand, multi-channel, purpose-driven group.

Currently, units’ shares in the group revenue are as follows: Natura 63%, 28%, and Aesop 9%.

For more on Natura’s second quarter performance, please click here.

NU SKIN

“Our second-quarter results were negatively impacted by limited sales meetings, media scrutiny and consumer sentiment in Mainland China in connection with the recently completed 100-day review of the nutrition and direct sales industries,” said Ritch Wood, CEO of Nu Skin.

Nu Skin reported $624 million sales last quarter. This was 4% less than last year same quarter’s figure ($704 million). Of the seven regions, only Japan reported growth (2%) and China dropped the most (-24%). China is Nu skin’s biggest market with its more than 1/3 share in the global sales.

During the earnings call following the quarter results, Nu Skin management stressed the fact that China would remain as their top priority. They explained three specific initiatives: Launch of a new product, new business incentives to improve sales leader productivity, and initiatives focusing on customer acquisition and retention including a new customer referral program.

Management’s revenue expectation for 2019 is:  $2.48 billion to $2.52 billion or -6% to -8%. Nu Skin’s 2019 mid-year revenue is 7% less than last year’s.

For more on Nu Skin’s second quarter performance, please click here and here.

TUPPERWARE

Tupperware’s second quarter sales performance was far from being satisfactory: $475 million (-11% as compared to last year same quarter). All regions reported negative figures, Asia-Pacific and South America leading them (each with -14%).  Tupperware’s global sales force decreased to 565 million, representing a 9% decline.

“Overall, the business fell short of our expectations in some markets as geopolitical concerns and lower consumer spending headwinds in two of our key markets resulted in a miss of our local currency sales expectations,” said Tricia Stitzel, Chairman and CEO of Tupperware.

Tupperware expects an annual sales decline of between 9-11% in 2019. Tupperware’s sales had decreased by 8% in 2018. In fact, the company reported positive growth only in one year (2017) during the past five years. Tricia Stitzel commented on the future,  “This is the three-year endeavor that may be bumpy at times, we’re tasked with turning a large ship and bringing along a family of over 3 million individual sellers with us.”

For more on Tupperware’s second quarter performance, please click here and here.



USANA

USANA reported quite disappointing results for the second quarter: Global sales was down 15% versus last year (USD 256 m vs. USD302 m). During the first quarter, USANA had come up with negative growth as well (-6.5%).  Consequently, company’s mid-year growth is 10% behind last year.

The worst figure came from USANA’s largest business region of the four, China. Sales in China was down 23% and accounted for about 70% of the total decline in USANA’s sales. Americas & Europe (-15.9%) and Southeast Asia Pacific (-1.5%) also reported declining sales. The only positive situation was in North Asia (+19%), company’s smallest business unit.

Commenting on the results, CEO Kevin Guest said, “The continuing challenging market environment in China was the major factor that impacted our second quarter results. During the second quarter, we offered promotions and incentives in China that have historically generated meaningful sales and customer growth. However, the contribution of these promotions was significantly lower than we anticipated, which we believe is due to the low consumer sentiment toward health products in China.”

USANA management announced the net sales outlook for 2019 as “between $1.02 billion and $1.06 billion”. This is significantly lower than their expectation after the first quarter (was between $1.21 billion and $1.26 billion). If this revised projection happens, USANA will be reporting an annual sales decline for the first time after several years of substantial sales increases.

For more on USANA’s second quarter performance, please click here and here.

Generally speaking, the picture was not bright at all as a whole for these giants in the first half. Let’s see how their performances will evolve during the second half.

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Hakki Ozmorali is the Principal of WDS Consultancy, a management consulting firm in Canada specialized in providing services to direct selling firms. WDS Consultancy is a Supplier Member of the Canada DSA. It is also the publisher of The World of Direct Selling, global industry’s leading weekly online publication since 2010. Hakki is an experienced professional with a strong background in direct sales. His work experiences in direct selling include Country and Regional Manager roles at various multinationals. You can contact Hakki here.

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Guest Post by Brett Duncan
2019: The Year Direct Selling As We Know It Changed Forever

I know. It has quite an ominous sound.

And then, it also seems a tad presumptuous and oddly grandiose.

Of course, it could also just be another click-baity, news-jacky headline whipped up by a consultant trying to drum up business ;-).

I guess all of the above is possible. But none of it can dismiss the point that 2019 may indeed be the year we look back and realize it all changed. Direct selling as we’ve known it will never be the same. And I think I’m OK with that.

There’s a quote I’ve been thinking about a lot lately: “the revolution you’ve always wanted never looks like what you thought it would.” Isn’t that the truth?!? We’ve been talking about the eminent changes coming to direct selling for several years now. And we’ve certainly seen the shifts roll out steadily during that same time frame. To pin a date on when “it all changed” is silly.

But I must say, after leaving this year’s US DSA Annual Meeting in Austin, I felt the difference like I never have before. It was something in the air. You could see it in people’s eyes. It became quite clear in the conversations. It wasn’t fear, but it want’s certainty, either. Companies and executives seem to be more open to anything and everything than ever before. Even if it denies what we’ve regarded as sacred in direct selling crowds for some time.

No one was talking about the changes that were coming; we were all talking about the changes that are happening right now.

Crazy Times in Direct Selling

The last eight weeks have been relatively crazy ones for our industry, even for direct selling. AdvoCare is moving into a single-level compensation structure after ongoing conversations with the FTC. Stream is selling its energy business to NRG. Avon, both old and new, is forming new alliances with companies all over the world. It’s a lot to digest.

On top of it all, companies are pioneering new ways to combat today’s most popular challenges. Some have found the best way to fight Amazon as a direct seller is to join them. Others have embraced an omni-channel existence, where direct selling is one way their product is taken to the market. Complicated compensation plans are being traded in for something that looks more like affiliate marketing and rewards programs. Even Amway has a CEO with a last name other than DeVos or Van Andel.

The times, they are a changin.’

As tempted as I am to ramble on in a puddle of speculation, I will resist. Instead, I’d like to look at the three forces that are causing the shift, and that have, in my mind, made 2019 the milestone year we will remember in the future. While none of us will agree as to the year the changes began (did they ever stop?), I do believe we can all agree that the change is unmistakably upon us in 2019. Here are the market forces that have made it so.

My goal in pointing out these rather obvious forces is not to exhaustively describe them as though they are new. Rather, I want to remind us all of what they are, so that we can take a fresh look at our new world through the lens of these three viewpoints. Sometimes taking a new look at what you’ve always known is the ultimate form of innovation.

Market Force #1 = New Regulations

No reader of this newsletter is a stranger to all of the updates in our regulatory world. There’s no need to rehash that here. The government forces at play have certainly changed how they think of direct selling. And it’s forcing the way we have to think about it, too.

When I think of regulations, I think of rules. And when I think of rules, I think of a game, or a sport. Every game has rules. It’s what makes the game fair, clear and competitive. The rules are actually what makes a game fun.

I’m a big football fan. In the NFL, a committee meets every year to suggest, discuss and vote on new rules and updates. Over the past few years, some significant decisions have been made, all in a spirit to make the game better. There have been pretty significant changes to how kickoffs will work in an effort to improve the safety of the game. They moved the PAT (point after touchdown) back several yards a couple years ago to make that part of the game more engaging (and boy, has that worked!). They’ve gotten more sensitive on pass interference to … well, I’m still not sure what they’re doing with that one!

As you can imagine, coaches and players alike have all kinds of opinions about every rule change. And there’s no shortage of their expression of these opinions, either. But I can promise you this: they adjust their style of play pretty quickly to adhere to the new rules. It would be foolish not to. Their success is dictated by how well they play the game within the confines of the current rules.

The rules of direct selling are changing. And it’s not those of us in the industry that are making the changes, for the most part. I personally don’t agree with all of the rule changes, and I bet you struggle with them, too. I find myself trying to figure how and when to fight back and appeal, and when to take note and adjust accordingly.

But here’s what I do know: the rules have most definitely changed. The term “game changer” is almost cliché and certainly misused, but that’s exactly what we are experiencing in direct selling due to these new regulations. The game has changed.  For me to play my best game, I better figure out how to play within the confines of those rules. Otherwise, I’m not even playing the right game!

It doesn’t help that the interpretation of the rules is murky right now. Where we want clear boundaries, we get “guidance” instead. Maybe that’s just the process. In the meantime, I know there are plenty of no-brainer areas where embracing the shift whole-heartedly would not only be prudent, but even opportunistic.

It really comes down to where we want to invest our best efforts. Do you want to spend your resources getting better at playing yesterday’s game, or preparing to play the new game?

Market Force #2 = The Consumer Marketplace

I think I’ve used the word “marketplace” more in the last year than I have in all the other years of my life combined. That’s because the marketplace is a powerful force. And it’s one that is begging direct selling to change so it can continue to be relevant for decades to come.

Even if the regulatory environment was not forcing certain changes, the consumer marketplace most certainly still would. And in many cases, the changes would be the same.

I’ve distinguished this as the “consumer” marketplace for reasons you’ll see shortly down below. I think of the consumer marketplace in these main areas:

1. The way people want to shop and buy.
2. The access consumers have to brands and options.
3. The way people want to interact with brands.
4. The shorter lifespan of success for any brand.

Firstly, the marketplace is telling us it wants to shop for and buy stuff in a new way. And it goes way beyond ecommerce. From curated subscriptions to marketplace apps to influencer marketing to so much more, the actual experience and psychology of shopping is changing. It’s not just about simple checkout processes and payment options. In a world with so many choices, what the consumer experiences during the buying process on an emotional level is just as important as the functional level.

Access to more brands, more products and more options has compounded with the onset of the Internet. And since access to brands has gotten easier, the quantity of brands has increased. It’s easier than ever to create new products and offer them to a market. And because there are so many options for so many specific products, building actual brands that connect has become more important than ever. When 30 different companies are trying to build a better mousetrap, it’s the mousetrap that finds a way to connect with me emotionally and align with my worldview that gets my vote, and my money.

Because the experience of shopping has fundamentally changed, and because access to the products I want is overflowing, the expectations I have as a consumer in terms of how I interact with a brand has also fundamentally changed.  Sure, social media has a lot to do with this, but it transcends social media. Simply “meeting expectations” no longer meets expectations. Consumers expect to be rewarded for their loyalty and patronage. We expect to be treated as a precious gift. In addition, consumers are just as interested in what their association with a brand says about them as what the product does for them.

Finally, with the added importance of the shopping experience, increased access and higher consumer expectations, you see a shorter lifespan for most brands. Of course, it’s not impossible to build long term brands right now; it’s just less likely. And that’s because consumers are constantly looking for new experiences, access to new brands and interactions that exceed their perpetually growing expectations. In a world where overnight sensations sometimes don’t even take a night to go viral, we also see brand lifespans shortening at an alarming rate.

There are other components of the consumer marketplace, of course. But to think about these four areas are enough to prompt some deep thought. Direct selling could claim both advantages and disadvantages in every area. Here are some quick advantages:

• Shopping Experience: the in-person, community-centric shopping experience could actually become more attractive to some shoppers.
• Access: we provide curated access to unique products, typically not available anywhere else, with a personal touch.
• Interaction: what’s more interactive than an Independent Distributor with a customer?!?
• Lifespan: direct selling is a great go-to market strategy. In a world where everyone is trying to figure out how to go to the market, could we have a secret weapon?

Now, let’s look at some disadvantages:

• Shopping: direct selling companies are notorious for creating complicated shopping processes, mostly due to components of their compensation plan, hostess perks, etc.
• Access: Distributors may not be willing to compete with a seemingly endless list of options and marketplaces (e.g. Amazon, eBay, etc.)
• Interaction: Direct selling companies have long relied on their Distributors to interact with consumers. Now, consumers expect more, and that’s new ground for many of us.
• Lifespan: To be honest, direct selling companies have always struggled a bit with this one. But in a world where the competition compounds every day, could that lifespan shorten even more?

How is your company addressing these four areas?

Market Force #3 = The Entrepreneur Marketplace

I actually believe this market force could be the most powerful of them all, and have the greatest direct impact on our industry.

It wasn’t long ago that direct selling wasn’t only the best gig in town, but it was just about the only gig in town. It seemed ridiculous that anyone could start their own business for only hundreds of dollars. When compared to options like franchises, direct selling was the hands-down winner.

In addition, there weren’t so many direct selling companies. Once I was convinced that direct selling was a great option for me to earn some more income, I had a relatively limited menu to choose from.

Not so anymore. First, the number of active direct selling companies continues to grow. Even if direct selling was the only option, there are now hundreds of options within that one option. I don’t think that’s a bad thing, but it has impacted how we position our opportunity.

Most importantly, direct selling is definitely NOT the only gig in town anymore. As you well know, the “gig” has evolved into its own economy now. The “free agent nation” has emerged. The side hustle has taken center stage. There are endless opportunities for today’s entrepreneur.

There are better resources to explain what the Gig Economy actually is and what it looks like today (take a look at ultimategigbook.com – it’s fantastic) than I can offer here. Suffice it to say that direct selling isn’t exactly the belle of the ball in this space right now. That sounds bad, but I think many of us are beginning to see that we could truly position ourselves as the Ultimate Gig. It will require some fundamental changes in how we approach this entrepreneurial segment, but we definitely have some unfair, and under-leveraged, advantages in our corner.

Let’s briefly take a look at a few of the factors we must consider when thinking about the Entrepreneurial Marketplace:

1. The entrepreneurial options are endless.
2. Most people aren’t looking to “start a business” anymore.
3. The ease of earning trumps the volume of earning.
4. Customer acquisition is now on the home office.

Amazon. Uber. Etsy. Freelancing. Virtual employees. Affiliate marketing. The list is endless in terms of how easy and accessible it is for anyone to find a way to be entrepreneurial. Whether you’re looking to strike it  rich starting a business, or just make $50 today to pay for dinner tonight, it’s pretty easy to do it. So where does direct selling stand out in a sea of entrepreneurial opportunities?

While direct selling companies keep promoting “business opportunities,” the Gig Economy keeps showing us just how many people aren’t interested in that. In fact, it may actually turn them off. Making an extra $300 a month isn’t typically considered “a business” by a normal person. Sure, it technically is a business, but that’s not how most people think about it. So why do we keep pushing it?

And since most people aren’t interested in starting a business, they definitely aren’t interested in investing in a business. As you compare yourself to the other options in the Gig Economy, ask yourself this: how many of them require an upfront purchase to take part in it? In other words, what is their “Starter Kit?” When choosing between a side hustle that’s free for me to start and one that costs $50, most people go with the free option without even considering the benefits of the $50 investment. What should direct selling companies be doing about this?

So, in a world where the entrepreneurial options are endless, and where “starting a business” isn’t that attractive, then it only makes sense that what most people are looking for is the easiest way to make that side income in a way that fits their schedule the best. The majority of your Distributors, and definitely those who choose an option outside of direct selling, are looking for the easiest, quickest, most streamlined and hassle-free way to earn a modest amount ($100?). And they also want to get paid for it immediately. Sure, there are still some who will realize that, “If working 3 hours got me $100, then I wonder what 10 hours could get me?” But that’s not most people.

And, by the way, direct selling has always been its best and most fruitful when you get a lot of people sharing a little bit of product. If you have lots of Distributors meeting a need by earning an extra $250 a month, you’ll have no problem developing a subset of leaders who can earn substantial incomes that would compete with a full-time job. But we can’t expect everyone to become a leader. I would go so far as to say we should shift our focus to generating the $250 monthly earners.

Finally, the role of customer acquisition is increasingly falling on the home office instead of the Distributors. This is completely new terrain for direct selling. You could easily argue it’s a foundational shift. The whole idea (simplified) around direct selling originally was that the home office would create the products, ship the products and mail the checks, and the Distributors would find the customers and make the sales. Not anymore. As we continue to compete with more and more entrepreneurial opportunities that actually don’t expect the entrepreneur to handle customer acquisition, we must realize how the expectations of the entrepreneurial mindset has shifted away from the traditional form of direct selling I described above. On top of that, the home office now has to find the budget to generate customer acquisition while still funding the rich compensation plans we’re known for.

How is your company attracting today’s entrepreneur? Do you spend your time trying to convince this growing audience of why your way is better? Or are you finding ways to align your business model with what this marketplace is telling you it wants?

Moving Forward With Confidence

So, it’s all here upon us, right now in 2019. The change we’ve been discussing for years is here. Does it look like you thought it would? More importantly, what will your company look like in response to it?

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AVON

Avon’s global sales in the first quarter was $1.187 million, 15% less than its figure in the same period of 2018.

Its EMEA region came with 19% and South Latin America with 17% quarterly decline in revenue. Sales in North Latin America was down 1% and the only positive figure was from Asia Pacific which grew by 3%. At the markets level, Russia’s quarterly sales was -31% and Argentina’s was -27% as the two worst-performers.

Avon’s active representatives in the first quarter was down 9%, too.

Commenting on the first quarter results, CEO Jan Zijderveld was optimistic: “Although total revenue is down, we see improvements in many areas, especially the better underlying trends in Brazil and continuing good performance in Mexico; however, we did deteriorate in Russia.”

Last month, Avon signed an agreement with LG Household & Health Care to sell its remaining 19.9% ownership in New Avon (i.e. Avon North America). Avon had previously sold its majority shares in Avon North America to Cerberus.

Furthermore, we know there is a strong interest from Brazil’s Natura to acquire Avon globally.

For more on Avon’s first quarter performance, please click here and here.



HERBALIFE

Herbalife’s quarterly sales of $1.2 billion included growth in four out of its six regions and was approximately flat compared to first quarter 2018. Excluding China, sales increase was 6% compared to the first quarter of last year. In China, sales decrease was 29%. Herbalife’s other poor performing region was South & Central America (-21%).

Re-appointed CEO Michael Johnson said, “We delivered net sales growth in four of our six regions, which included year-over-year growth in seven of our top 10 countries. Our geographic diversity is an asset that helps us deliver these results, and geographic diversity is uncommon in the nutrition and direct selling industries.”

The Chinese government had announced a 100-day review of Herbalife’s health products that had an impact on its business, the management said. Without the impact from China, Herbalife announced it would not have taken down its yearly guidance for the full year.

Herbalife’s sales growth expectation for the second quarter is between -3.5% and +2.5%.For the full year, it is between -1% and +5%.

For more on Herbalife’s first quarter performance, please click here and here.

NATURA

Natura reported R$ 2.915 billion in the first quarter of 2019. This represents more than 8% growth over last year’s Q1. Natura is the sixth largest direct seller in the world as of 2018 sale.

Among the Natura group, Aesop brand’s sales increased by 34%, The Body Shop by 10%, and the flagship company Natura’s net revenue grew by  5%.

Roberto Marques, Executive Chairman said: “Natura & Co. of posted another solid set of consolidated results in the first quarter of 2019, confirming the continuing momentum of the multi-brand, multichannel, purpose-driven beauty group we have constituted. All three of our brands and businesses posted sales growth in Brazilian Real in spite of challenging market conditions in some key markets, notably Brazil.”

For more on Natura’s first quarter performance, please click here.

NU SKIN

The first quarter sales of US$629 million meant 1% growth for Nu Skin (vs. US$616 million).

China was the main driver with 6% sales increase. China was followed by Southeast Asia as the only other region that posted growth (2%). Nu Skin’s all other five regions reported decreasing revenue.

“We remain confident in our growth prospects in 2019 as we focus on the continued execution of our growth strategy. We will drive increased productivity by investing in technologies to better support our sales leaders, expanding our global beauty device systems with product introductions and line extensions, and optimizing our Velocity sales compensation program,” said CEO Ritch Wood.

Nu Skin’s announced its 2019 annual revenue guidance as $2.76 to $2.81 billion. For the second quarter, projected revenue is $660 to $680 million.

For more on Nu Skin’s first quarter performance, please click here and here.

ORIFLAME

Oriflame closed the first quarter with 7% decrease in its global sales (EUR 309 m vs EUR 331 m).

CEO Magnus Brannstrom said, “While we are encouraged by the positive development in Latin America, Africa, Europe and most of the CIS markets, we continued to see a sales decline in Asia & Turkey impacted by challenging market conditions as well as governmental and legislative initiatives in China and Vietnam.”

Oriflame’s worst performance came from its Asia &Turkey region where sales dropped by 17% versus last year’s Q1. CIS was down also 4%, but Europe & Africa (+2%) and Latin America (+10%) came with better results. The situation in the Asia & Turkey region can be alarming for the company as these markets account for more than 1/3 of Oriflame’s total volume. Active representatives in this region decreased 20%, too.

For more on Oriflame’s first quarter performance, please click here.



TUPPERWARE

Within this group of seven, Tupperware reported the second worst sales growth performance after Avon. Tupperware’s US$487 million quarterly revenue was 10% lower than previous year same period’s.

All regions contributed to this global result with their negative growths: South America -20%, North America -11%, Asia-Pacific -9%, and Europe -4%.

CEO Tricia Stitzel commented, “We are beginning to implement the detailed project plans for transformation initiatives that we announced in January aimed at enabling sales growth and providing some future direct annualized cost savings. In the near term, we are pleased to see sequential improvement in sales as we continue to stabilize the business during this transformation period. We are also making good progress on our access and engagement strategies through studio expansion and digital deployment.”

Management announced company’s annual revenue is expected to decrease by 3-5% in 2019 as compared to 2018.

For more on Tupperware’s first quarter performance, please click here and here.

USANA

USANA, too, reported negative growth in the first quarter: -6.5%

“Three factors unfavorably affected our sales results for the first quarter of 2019,” said CEO Kevin Guest. “First, our 2019 operating plan contained very little promotional activity during the first quarter… This had a more significant impact on our global momentum than we anticipated… Second, the Chinese government’s 100-day review of the health product and direct selling industries that occurred during the quarter was accompanied by unexpected, persistent, negative media coverage about these industries in China… Finally, the unfavorable impact of a stronger U.S. dollar on net sales was also significant.”

In fact, first quarter sales in China was down 8.7%. This market accounts for more than half of USANA’s global revenue.

Company’s global sales in 2019 is expected by the management to be between $1.21 billion and $1.26 billion, representing growth between 1.7% and 5.9%.

For more on USANA’s first quarter performance, please click here and here

We will have to wait now to see what the rest of the year will look like for these companies.

…..

Hakki Ozmorali is the Principal of WDS Consultancy, a management consulting firm in Canada specialized in providing services to direct selling firms. WDS Consultancy is a proud Supplier Member of the Canada DSA. It is also the publisher of The World of Direct Selling, global industry’s leading weekly online publication since 2010. Hakki is an experienced professional with a strong background in direct sales. His work experiences in direct selling include Country and Regional Manager roles at various multinationals. You can contact Hakki here.

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The review focuses on the largest seven publicly-owned direct sellers: Avon, Herbalife, Natura, Nu Skin, Oriflame, Tupperware and USANA.

AVON

Avon’s total revenue in the last quarter of 2018 was $1.402 billion, representing a 11% decrease from 2017 last quarter ($1.569 billion). Annual result was down 3% from 2017, adding another year of negative growth to Avon’s history. None of Avon’s regions was able to report sales increase in the last quarter.The worst result was from South Latin America with 15% quarterly sales decrease.

Active representatives also declined 6% in Q4, with decreases in South Latin America, Europe, Middle East & Africa, and Asia Pacific.

In 2018, 69% of Avon’s sales was generated by its beauty line, 14% by fashion products and 11% by its “home” category.

CEO Jan Zijderveld said, “As I wrap up my first year at Avon, we have a clear strategy to Open Up Avon and are taking the necessary steps to return this company to growth. We understand that the foundation of our success lies in the training and retention of our Representatives. Empowering women to build successful businesses and generate relevant earnings in countries around the world will, in turn, enable us to grow. This is a large task that involves the efforts of every employee and Representative.”

In late January this year, Avon announced 10% reduction in its global workforce, 15% in inventory reduction and 25% decrease in Stock Keeping Units (SKUs).

For more on Avon’s Q4 2018 results, please click here and here.



HERBALIFE

Herbalife ended last year $100 million short of being a $5B-company. Herbalife’s 2018 revenue of $4.892 billion meant 10% growth versus 2017.

Final quarter performance was $1.187 billion sales, up 8.5% from Q4  of 2017. Highest growth was achieved in Asia-Pacific (+22%). North America region reported 11.7%, China 11.1%, Mexico 6.0%, and EMEA 5.7% growth. The smallest region in size, South & Central America reported decreased sales (-18.5%). Management said year-over-year increases were achieved in 8 of company’s top 10 markets. Herbalife’s regional sales figure for the full year of 2018 are shown on the right:

“In 2018, we continued to show the strength of our business in providing premier nutrition products to distributors and consumers around the world. We achieved double digit net sales growth and record volume points, enhancing our value for shareholders,” said Michael O. Johnson, Chairman and CEO of Herbalife.

In early January this year, Herbalife’s CEO Rich Goudis had abruptly resigned with immediate effect, resulting in previous CEO Michael O. Johnson taking over.

Company announced its sales growth target for 2019 as “between 4% to 8%”.

For more on Herbalife’s Q4 2018 results, please click here and here.

NATURA

Brazil’s cosmetics giant reported 16% revenue increase in Q4. Natura’s 2018 full year sales growth was 36% over previous year. Without the positive base effect of The Body Shop’s acquisition in 2017, the annual growth was still a remarkable 13.5%, reaching Brazilian Real 13,397 billion (approx. USD 3.6 billion).

Management announced Q4 2018 was the strongest quarter in Natura’s history.

Natura group’s consolidated business consists of three divisions: Natura, The Body Shop and Aesop. Natura division reported 10% growth in 2018, The Body Shop 18% (with base-effect adjustment), and Aesop 51%.

Currently, Natura division accounts for 63% of the group’s consolidated global sales. 29% is generated by The Body Shop, and 8% by Aesop.

For more on Natura’s Q4 2018 results, please click here.

NU SKIN

With the 3% revenue increase in the fourth quarter, Nu Skin ended the year with 18% sales growth as compared to 2017 ($2.679 b vs. $2.279 b).

The highest quarterly growth came from South Asia (+9%). That was followed by EMEA (+6%), and Hong Kong/Taiwan (+2%). Nu Skin’s largest region Mainland China’s sales decreased by 2%. China alone accounts for about 1/3 of company’s global sales.

“We grew our revenue 18% percent for the year, with growth coming from virtually all of our segments. We were also encouraged that our customer acquisition strategy resulted in 16% growth in our customer base,” said Ritch Wood, CEO of Nu Skin.

For 2019, Nu Skin announces it expects $2.76 billion to $2.82 billion annual sales, that is 3 to 5% growth.

For more on Nu Skin’s Q4 2018 results, please click here and here.



ORIFLAME

Oriflame’s sales in the last quarter of 2018 was €370.3m, down 3% from previous year. Company’s full year sales growth performance for the whole year was also -3%. Its field force on the hand, increased by 1% in 2018, thanks mostly to the performances in CIS  (+12%) and Latin America (+9%).

In Q4, revenue in Europe & Africa grew by 7%, Latin America by 5%, decreased in CIS region by 2%. The worst quarterly performance came from Oriflame’s Asia & Turkey region: -13%. Asia & Turkey is company’s largest region with its close to 40% share.

Oriflame’s revenue generating product categories’ shares in total revenue are as below. Wellness products’ performance was remarkable in 2018 (increased to 13% from 11%):

CEO Magnus Brannstrom said on the results, “2018 has been a year of mixed performance for Oriflame. While the slower development in Asia & Turkey during the fourth quarter was disappointing, the improved sales momentum in most other regions demonstrates the strength of our balanced geographical footprint.“

For more on Oriflame’s Q4 2018 results, please click here.

TUPPERWARE

Tupperware’s fourth quarter growth was quite a disappointment for its investors: $506 million in revenue which was down 14% from same period of 2017. With this last quarter performance, Tupperware closed the year with 8% less sales versus 2017 ($2.070 billion vs $2.256 billion)

All regions made a contribution to Tupperware’s disappointing fourth quarter performance: South America (-22%), Asia-Pacific (-16%), Europe (-12%), and North America (-7%).

Tricia Stitzel, President and CEO of Tupperware, commented, “Our sales and segment profit results in the fourth quarter were not what we expected, leading to our desire to accelerate the business transformation to capitalize on our Global Growth Strategy. We continue to operate with a sense of urgency and remain confident that, over time, our initiatives will ensure our major units deliver consistent sales and profit growth and create enhanced value for our shareholders.”

Management declares its “strategic road map” includes five components as the table to the right shows. Yet Tupperware management is not too optimistic for this year as it announced it had targeted an additional revenue decline of 2 to 4% in 2019.

For more on Tupperware’s Q4 2018 results, please click here and here.

USANA

USANA came up with impressive sales growth both in the fourth quarter and in 2018 as a whole: Fourth quarter revenue was $299 million (an increase of 9.5% year-over-year), and 2018 full year revenue was $1.189 billion (an increase of 14% from 2017). USANA has been generating over $1 billion annually for the last three years now. 2018 also marked the 16th consecutive year that the company has delivered record sales.

In the last quarter of 2018, USANA generated 81% of its sales from Asia-Pacific region. Americas and Europe accounted for the rest (19%). China is USANA’s largest market with its 56% share in revenue.

“USANA finished the year with another quarter of solid results, bolstered by our annual China National Sales Meeting in Macau and a few targeted product promotions in select markets,” said Kevin Guest, Chief Executive Officer.

For 2019, USANA expects net sales between $1.25 billion and $1.30 billion, representing a growth of between 5.1% and 9.3%.

For more on USANA’s Q4 2018 results, please click here and here.

…..

Hakki Ozmorali is the Principal of WDS Consultancy, a management consulting firm in Canada specialized in providing services to direct selling firms. WDS Consultancy is a proud Supplier Member of the Canada DSA. It is also the publisher of The World of Direct Selling, global industry’s leading weekly online publication since 2010. Hakki is an experienced professional with a strong background in direct sales. His work experiences in direct selling include Country and Regional Manager roles at various multinationals. You can contact Hakki here.

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This analysis will focus on the public direct selling companies, Avon, Herbalife, Natura, Nu Skin, Oriflame, Tupperware and USANA, in alphabetical order.

AVON

After the third quarter, Avon’s CEO Jan Zijderveld gave an opening speech at the investors call and said that six weeks ago he had described Avon as the “patient on the operating table”. Avon has been presented by its management as being in similar situations over and over again… for seven years now.

Avon reported $1.4 billion revenue in the third quarter, almost the same as last year same quarter. However, excluding the Brazil IPI tax release in this quarter, Avon’s total revenue decreased 11% to $1.3 billion. South Latin America reported 9% sales growth, sales in Asia-Pacific was up +2%, North Latin America reported unchanged sales, and sales in EMEA was down 8%.

Management said Brazil’s performance had continued to negatively impact company’s  overall results. The sales decline, it was said, represented more than 80% of the overall revenue decline from all segments.

Avon’s active representatives declined 5% with decreases in all its regions and its ending representatives were -6%, again, with decreases in all regions.

During the investors call, CEO Zijderveld responded to a question and told about their strategy: “Internally we’re shifting really a lot of focus to productivity of our representatives and increasing her earnings. And in the end, that is all about rep retention. So, we’ve a pretty good recruitment machine, but what we really need to add to it is a retention machine, and the core of the retention is really about earnings, and earnings is really driven by training, and it’s as simple as that.”

Avon’s beauty product sales dropped by 16%, “color” recording the highest decline (-21%. Its fashion and home line declined by 8%, too.

For more on Avon’s Q3 results, please click here and here.

Herbalife increased its quarterly sales by 15% compared to last year third quarter ($1.243 b vs. $1.085 b). The highest growth came from its China region that grew by 27%. North America (+20%), Asia-Pacific (+19%), EMEA (+10%) and Mexico (+6%) were the other regions that contributed to growth. South & Central America, the smallest of Herbalife’s all regions, was the only region that came up with decreased sales (-10%). After these results, Herbalife’s revenue in the first three quarters is 11% above the same period of 2017.

Herbalife CEO Rich Goudis said, “This quarter was our largest third quarter in the company’s history, with 15% year-over-year growth, and the second largest quarter overall following the record that was set in the second quarter this year.”

A few weeks ago Herbalife announced it had entered the $38 billion coffee category, starting from the U.S. Apart from this, the company introduced during the last quarter, a total of 58 products in its 51 markets.

Following the the third quarter, Herbalife targets 6.5%-10.5% sales increase for the last quarter and 9.9%-10.9% for the whole year versus last year. If achieved, Herbalife will be ending the year with a revenue of very close to $5 billion.

For more on Herbalife’s Q3 results, please click here and here.

NATURA

Natura’s net sales in the third quarter was up 37% versus prior year. A significant part of it came from the acquisition of The Body Shop. Even without this though, the consolidated quarterly revenue growth was 17%.

Natura’s business now consists of three segments and each of them posted positive growth figures last quarter: Natura 4.5%, The Body Shop 277% (not comparable because of the timing of acquisition), and Aesop 67%.

Following these results, management said, “With double-digit growth in revenue and adjusted EBITDA and net income more than doubling, Natura &Co posted another quarter of solid performance, providing new evidence of the growing momentum and strength of our global, multi-brand, multi-channel group. All three of our brands and businesses continued to contribute to a very satisfactory underlying performance.”

Management was quite happy with the results in Brazil, Natura’s home country. Sales grew by more than 9% in Brazil in Q3. Along with its direct selling channel, Natura has been opening and running retail stores in Brazil. It was announced that the number of these has reached 31 now with the opening of 12 new stores throughout the country last quarter. Natura Brazil has more than 1 million consultants on the field.

For more on Natura’s Q3 results, please click here.

NU SKIN

Nu Skin came up with a strong 20% revenue increase in Q3 as compared to last year’s third quarter ($675 m vs. $564 m). Nu Skin’s all regions posted positive revenue growths in the last quarter. The performance in Mainland China was especially impressive (31%), contributing $54 million to this increase. Southeast Asia brought 21% growth. During the investors call, Nu Skin said its product Lumispa had accounted for $74 millon sales in Q3.

“We delivered strong year-over-year financial results with reported revenue growth in every region,” said Ritch Wood, CEO of Nu Skin.“This is our fourth consecutive quarter of revenue growth of 20% or more, driven by the continued execution of our growth strategy focused on engaging platforms, enabling products and empowering programs which led to solid customer growth of 9% and sales leader growth of 14%.”

Nu Skin’s total revenue after the first three quarters is $1.996 m which is 24% above last year. For 2018, management announced they had increased their annual revenue guidance to be between $2.66  and $2.68 b, expecting $665 to $685 million in the last quarter.

For more on Nu Skin’s Q3 results, please click here and here.

ORIFLAME

Oriflame’s global sales declined by 1% in the third quarter from €295.3 million to €292.5 on a year-over-year basis. Company’s nine-month sales growth performance is below last year’s, too (-4%).

The only region that came with a positive growth in Q3 was Europe & Africa (+4%). Sales in Asia & Turkey and Latin America units were stable (0% growth). CIS reported the worst among all: -8%.

Active consultants in the quarter was stable, amounting to 2.7 million. Oriflame’s unit sales decreased by 3% and the price/mix effect was up by 7%, driven by mix. The positive mix effect, as reported, was mainly driven by skin care and wellness lines.

CEO Magnus Brannstrom commented on the quarter results, “We entered the third quarter facing continued challenging market conditions in some of our key markets… Measures focused on driving activity and recruitment to enhance sales growth in CIS and Latin America have proven successful… The performance in Asia & Turkey was slower during the second part of the quarter, partly as a result of the macroeconomic conditions in Turkey and lower activity in China. Sales development into the fourth quarter is slightly above the previous quarter and actions focused on driving activity and recruitment are ongoing.”

For the developments on the digital platforms, management said the transition to mobile devices continued to increase. More than 95% of the orders were placed online, of which 40% were placed on mobile devices. Key activities during the quarter included the continued rollout and development of the company’s e-commerce capabilities and further investments to the Oriflame App Suite.

For more on Oriflame’s Q3 results, please click here.

TUPPERWARE

Tupperware reported $486 million sales, down 10% versus last year. Sales in its Europe business unit increased by 1%, led mainly by South Africa (+16%) and CIS (+10%) and offset by Tupperware’s “established” markets in Europe. Asia-Pacific’s sales decreased by 8%, North America’s by 11% and South America’s by 24%.

Leading worse-performing markets in the third quarter were: Indonesia (-31%), India (-27%), Brazil (-23%). Tupperware United States and Canada sales were down 3%, too. Management said this year-over-year decrease was due to a “blockbuster campaign” in July 2017 that was not repeated in Q3 2018.

For the rest of the year, Tupperware expects -9% to -7% growth in the fourth quarter and to close the year by -7% to -6%. Management reports “there is a negative 2-point impact in the 2018 full year sales comparisons from the closure of Beauticontrol in 2017 and the combination of NaturCare and Tupperware in Japan, effective at the beginning of 2018.”

Tupperware recently introduced a nutritional line in China. Currently, this line is being sold in the outlets and regionally. Eventually, it is expected to be sold online.

During the earnings call, CEO Patricia Stitzel was proudly announcing they had their first e-commerce launch for Europe, in Germany, providing the sales force with their own personal websites with e-commerce functionality… Well, having been so late, it seems Tupperware needs to hurry on the digital platforms if they want to make Tupperware a relevant brand.

For more on Tupperware’s Q3 results, please click here and here.

USANA

USANA’s third quarter sales was $297 million, representing an an increase of 13% year-over-year (vs. $262 million). As far as regional performances were concerned, North Asia grew by 27%, Greater China by 23% and Southeast Asia- Pacific region by 12%. Sales in the Americas & Europe region decreased by 9%.

CEO Kevin Guest commented, “USANA generated very strong results for the third quarter, notwithstanding the notable strengthening of the U.S. dollar both year-over-year and sequentially. Our growth is due to the momentum we continue to see across most of our markets. For instance, local currency net sales in five of our markets grew by more than 20% during the quarter. Five additional markets grew by more than 10% as we had several additional markets grow.”

With this third quarter performance, USANA’s first nine months’ revenue is 15% higher than last year same period’s.

The management updated its outlook for the whole year of 2018 and announced its sales expectations as “between $1.185 and $1.2 billion”. This was previously $1.17-$1.2 billion.

Regarding the internal investigation of China operations (i.e. “BabyCare Ltd.”), USANA said the company had assumed direct responsibility for reviewing the matters and  hired an experienced counsel to conduct the investigation. The Company added, it did not believe the amounts would materially impact its financial statements, but it could also not predict the outcome of this investigation.

For more on USANA’s Q3 results, please click here and here.

Will the fourth quarter be better than the first nine-month performances for these direct sellers? We will have to wait and see…

Please click links for these companies’ 2018 Q1 and Q2 reviews.

…..

Hakki Ozmorali is the Principal of WDS Consultancy, a management consulting firm in Canada specialized in providing services to direct selling firms. WDS Consultancy is a proud Supplier Member of the Canada DSA. It is also the publisher of The World of Direct Selling, global industry’s leading weekly online publication since 2010. Hakki is an experienced professional with a strong background in direct sales. His work experiences in direct selling include Country and Regional Manager roles at various multinationals. You can contact Hakki here.

The post Third Quarter in Sales Figures appeared first on The World of Direct Selling.

Andrea Jung had been promoted to CEO role at the age of 41 in 1999 and remained there for 12 years. After all those years, the company she handed over to Sheri McCoy was not in a bright situation at all. In her last four years, Avon’s debts went from $2.1 billion to $3.3 billion, representing nearly 60% increase. An ex-CFO of Avon said the company’s cash management was so bad that in some years, it even had to borrow money to pay dividends to shareholders. In an industry where mass media spending has always been largely questioned, Avon’s advertising budget increased to $400 million in 2010 (it was $63 million in 1999).

Besides worsening results, the infamous China bribery issue emerged in the same period. The investigation took years, costing the company hundreds of millions of Dollars.

As a result of all, Avon’s stock value dropped by 45% during Jung’s last year. And Jung’s replacement with McCoy was met with cheers.

Sheri McCoy was an outsider to the direct sales industry. She had come from the famous consumer healthcare care products company Johnson & Johnson, after working there for 30 years.

McCoy’s first year was marked as an important year for Avon from an additional aspect: That year, the crown changed hands and Amway became the largest direct selling company, overthrowing Avon. Amway has stayed at that position since then.

Things did not go well under McCoy’s management, too. After all what had been done during Sheri McCoy’s time, an Avon share that was valued around $22-23 on the New York Stock Exchange in 2012 went down to an all-time low of $1.85 in November 2017 (The current all-time-low is $1.40 that happened in July 2018).

Avon announced in 2017 that Sheri McCoy would be stepping down in March 2018 to retire after six years at the CEO office.

Early this year, Jan Zijderveld was appointed as Avon’s new CEO. Just like his predecessor, Jan Zijderveld was also coming from outside the direct selling industry. This time, Avon had chosen its leader from Unilever where he was the President of European business unit.

Following the unsatisfactory results in the first quarter, Zijderveld summarized what they should do as: “To win in this market, we must significantly step up our competitiveness. It is important to be agile and quickly identify, understand emerging trends and capture those opportunities faster. This means Avon must start driving bigger on-trend innovations and platforms, and bring them to market much faster with greater scale and impact. For this, we need to become more glo-cal, this means global and local. A few big global innovations with scale and impact, while at the same time capturing opportunities through locally relevant innovations with speed and agility.”

In a short while, he made several important management changes: Benedetto Conversano was appointed to the newly-created SVP, Chief Digital & Information Technology Officer; Anna Chokina was appointed to VP, Global Brand Marketing, Skincare and Personal Care; Elena Degtyareva to VP, Global Fashion and Home; Amy Greene to VP, Investor Relations, Bill Rahn to VP, APAC region; Dronacharya Chakraborty to GM for India; and José Vicente Marino to GM for Brazil.

Second quarter was not a success, too, with global revenue being down 3% from last year’s same quarter. Avon shares were being valued at around $1.80 after this result.

However, September saw two interesting happenings:

The Brazilian cosmetics giant Natura was said to have been interested in a takeover. This gave a big boost to Avon shares, taking it to as high as $2.25. Natura immediately denied this rumor.

A few days after this, Avon held an investor day to give an update on company’s overall situation and announce its new long-term strategy “Open Up Avon”. The information shared was taken so positively that the share price moved further up to $2.50.

Management said they expected a low-single digit revenue growth, low double-digit margins, and $400 million in cost savings by 2021. The 2021 operating margin target of at least 10% would mean a significant improvement as compared to 2018’s 6.4%.

Additionally, Avon announced plans to invest around $300 million in IT, in new product categories and in various marketing, training, and digital tools.

An analyst commented after this investor day, “We were impressed with the sense of urgency displayed by new CEO Jan Zijderveld at his first analyst meeting on Sept. 21. Unlike the previous CEO, he is engaged in operations, is committed to establishing a culture of accountability and has moved quickly to bring in executives with direct selling experience.” She also said she had upgraded Avon shares from “Neutral” to “Buy” and doubled her price target from $1.75 to $3.50!

Obviously, what we see now are only plans and changes without any strong results yet. The third quarter which actually is over by now will give us some signs when we have the reports in a couple of weeks. Then, we will have a better sense of whether the turnaround is going to be real this time. By the way, Avon shares closed last week at $1.93!

…..

Hakki Ozmorali is the Principal of WDS Consultancy, a management consulting firm in Canada specialized in providing services to direct selling firms. WDS Consultancy is a proud Supplier Member of the Canada DSA. It is also the publisher of The World of Direct Selling, global industry’s leading weekly online publication since 2010. Hakki is an experienced professional with a strong background in direct sales. His work experiences in direct selling include Country and Regional Manager roles at various multinationals. You can contact Hakki here.

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