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.

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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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Let’s have a look at five of the major direct sellers’ first quarter achievements: Herbalife, Natura &Co, Nu Skin, Tupperware and USANA.

HERBALIFE

Herbalife reported 19% revenue growth in the first quarter of 2021 versus last year’s: US$1.501 billion vs. US$1.262 billion. The management announced this quarterly sales figure as “company record”, with the month of March representing the single month sales record. The previous quarterly sales record was the figure achieved in the last quarter of 2020.

Five of Herbalife’s six geographic regions reported year-over-year net sales growth in the quarter. EMEA’s sales increase was 37%, North America’s 30%, Asia & Pacific’s 22%, South & Central America’s 5%. Within the EMEA region, UK (+157%) and Turkey (+70%) ended Q1 with exceptionally good results. The only region that posted negative growth was China (-11%). Commenting on China, management said it is a relatively small component of  their business which is uncommon with a lot of Herbalife’s competitors. So, the current situation is not hurting the company much but this also means a huge opportunity, they added.

Based on these recent developments, Herbalife management increased its sales growth expectation for 2021 to the range of 9-15%, up from its prior range of 6-14%. Herbalife’s 2020 sales increase was 14%.

CEO John Agwunobi said, “Due to the ongoing performance of our materially enlarged sales force and the increased awareness and consumer demand for our rapidly expanding product portfolio, we have meaningfully raised and narrowed our full year 2021 guidance. We believe in the long-term growth opportunity of our business.”

As reported, the company’s sports nutrition line continued to drive growth, with sales of energy, sports, and fitness category increasing about 34% during the first quarter. Furthermore, Herbalife’s targeted nutrition category, which includes health and wellness products, grew by 21% while the core weight management product category grew by 16% in the first quarter.

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

NATURA &CO

Natura increased its sales by 26% in the first quarter. Consolidated net revenue in Q1 stood at R$9.5 billion (approx. US$ 1.8 billion).

The four business units’ individual growth performances were as follows: Natura &Co Latam 25%, Avon International 11%, The Body Shop 48% and Aesop 72%.

Management said Avon’s growth was driven by the UK market in Europe and by Philippines in Asia. Avon UK’s market share increased for the fourth consecutive quarter, making it the third brand in the beauty market, up from 10^th a year earlier.

The two key growth drivers in The Body Shop’s case were direct selling business (+251%) and e-commerce (+119%). Geographically, management highlighted the performances in the UK and North America.

Roberto Marques, Executive Chairman and Group CEO, commented, “Natura &Co turned in another strong performance in the first quarter despite a persistently challenging environment, demonstrating again the strength of its direct-to-consumer, multichannel model. All of our brands and businesses posted growth in Brazilian Reais in the quarter, and our continued pivot to digital and online sales allowed us to once again outperform the global CFT market.”

In the first quarter, Natura &Co Latam generated 55% of Natura’s group revenue. Avon International’s share was 25%, The Body Shop’s 14%, and Aesop’s 6%.

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

NU SKIN

Nu Skin’s year-over-year revenue growth in the first quarter was 31%. Last year’s Q1 figure was US$518 million and this year’s was US$677 million.

Among Nu Skin’s regions, the highest percentage growth came from EMEA (115%). It was followed by Americas/Pacific (100%). Japan reported 14%,China 9%, South Korea 7% and Hong Kong/Taiwan 1% sales increases. The only negative growth was in Southeast Asia by -3%.

“We are very pleased with a strong start to 2021 with our highest-ever first quarter revenue and earnings per share,” said Ritch Wood, company CEO. “Our innovative beauty and wellness product initiatives powered by our social commerce business model led to 34% growth in our customer base over the prior year and a 22% increase in global sales leaders. We continue to improve our geographic balance, driven by ongoing strong performance in the West, providing a more diversified and sustainable growth profile.” Also during the investors’ call, Ritch Wood said currently beauty devices make up about 30% of Nu Skin’s revenue and are a key growth driver.

In February this year, Nu Skin announced its CEO transition plan. Accordingly, company president Ryan Napierski will replace Ritch Wood in June.

Nu Skin management announced their expectations as US$680 to US$705 million revenue for the second quarter (+11 to 15%) and US$2.80 to $2.87 billion for the whole year of 2021 (+9 to 11%).

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

TUPPERWARE

As it was in the title of Tupperware’s press release, the turnaround plan seems to be well under way. Company’s first quarter sales growth was 22%, reaching US$460 million. All business segments reported healthy growth figures in Q1: Asia 4%, Europe 20%, South America 27% and  North America 45%. Sales increase in the U.S. was 83%!

Interesting to note here, unlike some of its competitors, Tupperware’s global business is quite evenly distributed among its segments is: Asia 27%, Europe 28%, South America 32%, and North America 13%.

After the first quarter, Tupperware’s global active sales force also increased by 16% to 568,000. The highest increase came from South America (50%).

“The strong financial performance this quarter is a concrete example that we are strengthening the foundation of our company. We continue to revitalize the brand through the expanded use of digital tools by our sales force to solve consumer needs,” said Miguel Fernandez, President and CEO of Tupperware.

Commenting on the plans for the future, Miguel Fernandez told they will expand their business-to-business partnerships where Tupperware sells its products to retailers who then use the products in their loyalty programs. As reported, company is now working with major brands in Mexico, Brazil and Europe. Additionally, Tupperware is testing new channels in the U.S., such as home shopping channels.

Management did not provide guidance for the coming quarters, “because of the uncertainty still around COVID-19 as well as the turnaround plan”, as stated.

As a closing note, Tupperware celebrates its 75^th anniversary this year, a very important milestone.

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

USANA

USANA started the new year with an impressive 16% quarterly sales growth over last year: US$308 million versus US$266.6 million. In 2020, USANA’s annual sales growth was 7%.

All geographical business units made positive contributions to the sales increase in Q1: Southeast Asia Pacific grew by 27%, China by 13%, and each of Americas-Europe Region and North Asia by 11%.

Quite satisfied with the results, CEO Kevin Guest said, “We had an excellent start to the year largely due to continued strong consumer demand for our high-quality products. Our strong top-line performance was driven by double-digit year-over-year sales growth in each of our regions, and we expect the execution of our 2021 global growth strategy will continue to generate growth in the remainder of the year.”

In late March, USANA launched its “Active Nutrition” line that aims at promoting healthy weight management, digestive health, energy and hydration. The initial launch phase included the United States, Canada, Mexico, Australia, and New Zealand, and the management said the feedback from customers has been very encouraging. This new line was not launched in China, USANA’s biggest market generating about 50% of its business. Management is not expecting to happen this year due to the regulatory requirements there.

Company also announced it has increased its revenue expectation for 2021 to US$1.24 – US$1.28 billion. If achieved, this will mean a double-digit growth this year as compared to 2020.

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

Generally speaking, the industry’s start to this year gave very encouraging signs that even better days may lie ahead. We will wait to see what the coming months will bring to us.
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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 Direct Selling Industry: A Strong Start to 2021 appeared first on The World of Direct Selling.

HERBALIFE

Herbalife ended the year with growth records: 1) Highest annual revenue in company history, 2) Largest fourth quarter global sales ever, 3) Best yearly sales in Asia-Pacific, EMEA and North America regions.

Herbalife’s fourth quarter sales was $1.4 billion and this represented 16% revenue growth from previous year’s same quarter. North America posted 33%, EMEA region 31%, Asia-Pacific 14% and South-Central America 10% sales increases. 36 of the EMEA countries came up with double-digit sales growth in the quarter. Among these, some stood out with remarkable results: Italy (34% growth), Spain (54%), France (57%) and the UK (129%).

The two Herbalife regions that reported negative growth in Q4 were China and Mexico.

Chairman and CEO John Agwunobi was very happy with the results, saying, “Simply put, 2020 was an amazing year, the best year ever for Herbalife Nutrition, and a testament to the strength of the company and the resilience of our distribution channel. Although 2020 was a record-setting performance year, I believe the best is still to come.”

With this impressive finish, Herbalife’s 2020 annual sales hit $5.5 billion, up 14% from 2019. This 14% rate of yearly sales increase was Herbalife’s best YOY rate of growth in the last 10 years.

Herbalife management anticipates a further 6% to 14% global sales increase in 2021.

For more on Herbalife’s fourth quarter and 2020 performance, please click here.

NATURA &CO

Natura &Co’s consolidated net revenue in Q4 was R$12 billion (approx. US$ 2.2 billion), up 24.3%. The company reported sales growth in all four of the group’s brands.

Company’s 2020 full year performance was remarkable as well: Consolidated revenue increase was 12%, reaching  R$37 billion (approx. US$ 6.6 billion). Among the group brands, Natura &Co LATAM’s sales increased by  9%, Avon International’s by 3%, The Body Shop’s by 32% and the smallest business unit Aesop’s by 50%.

As was stated by the management, The Body Shop owed much of this success to its “at-home” business (206% sales increase in Q4) and e-commerce (72% increase).

Natura &Co LATAM generates the largest business for the company, accounting for 56% of the group revenue. It is followed by Avon International (25%) and The Body Shop (14%).

Roberto Marques, Executive Chairman and Group CEO of Natura &Co, said: “In a year of unprecedented challenges, Natura &Co associates and our network across all of our businesses showed care and adaptability in the face of a global pandemic, demonstrating both our purpose-driven approach to business and the strength of our omnichannel, multi-brand model. Our performance in the fourth quarter attests to that, with strong growth in sales and profits.”

For more on Natura’s fourth quarter and 2020 performance, please click here.

NU SKIN

Nu Skin reported $748 million revenue for the last quarter of 2020 and $2.6 billion for the whole year. Company’s quarterly growth rate was 28%.

At the regional level, all of the seven regions posted sales increases. Americas/Pacific came up with the highest sales growth in Q4 (83%), followed by EMEA (79%).

“Balanced Geographical Profile” has been emphasized by Nu Skin as a key pillar of company’s overall strategy. In fact, there has been a significant business shift from Nu Skin’s Eastern regions to Western ones in the last five years. You can see the comparison on the below chart:

“Our strong fourth-quarter results were driven by exceptional customer growth of 34% compared to the prior year,” said Ritch Wood, Chief Executive Officer. “The successful Boost and Nutricentials product introductions helped generate 28%revenue and 29% sales leader growth in the quarter.”

While describing the results of the steps taken in digital technology at the investors’ call, management said during Black Friday in EMEA, four months of inventory of “Galvanic Spa” products were sold in just 90 minutes.

Nu Skin’s expectation for 2021 is announced as 5% to 9% revenue increase. The yearly growth was 7% in 2020.

In September this year, Nu Skin will witness a CEO transition. CEO Ritch Wood will retire after a 30-year career with the company. He will be replaced by Ryan Napierski, Nu Skin’s current President. Ryan Napierski has also been with Nu Skin for 25 years.

For more on Nu Skin’s fourth quarter and 2020 performance, please click here.

ORIFLAME

Oriflame, once again, closes a year with declining sales figures. Company’s total revenue decreased to €1.157 billion (approx. US$ 1.4 billion) in 2020 from €1.258 billion in 2019. This represented a drop of 8%. 2020 marks the third consecutive year with declining sales.

Oriflame’s fourth quarter performance was from reversing the negative trend within the year: Global sales decreased by 14% to €307.5m (€357.2m) in Q4.

All five regions of Oriflame reported negative growth in the last quarter: Asia (-19%), Turkey&Africa (-18%), CIS (-16%), Latin America (-14%) and Europe (-2%).

“2020 was a challenging year in many ways… After the first wave of the pandemic in the first half of the year, we experienced a positive sales turnaround in the third quarter that unfortunately was reversed in the fourth quarter. We also faced strong currency head winds negatively impacting our overall sales and margins. In addition, the combination of changed demand and product mix, together with relatively long inventory replenishment lead times, led to product availability challenges and accordingly impacted sales negatively in certain product categories towards the end of the year,” commented CEO Magnus Brännström.

In fact, there was a strong shift in Oriflame’s product mix. Color cosmetics’ share declined from 19% to 15% in Q4, wellness category’s jumped to 17% from 13%.

For more on Oriflame’s fourth quarter and 2020 performance, please click here.

USANA

USANA is among those direct sellers that ended 2020 with quite positive results: 15% sales growth for the last quarter and 7% for the whole year.

In the fourth quarter, all of USANA’s regions contributed to this result: Southeast Asia Pacific +34%,  North Asia 17%, Americas and Europe 14%, and Greater China 5%.

Kevin Guest, CEO and Chairman of the Board said, “Our fourth quarter results were better than expected and cap off a year during which USANA delivered remarkable results despite continued challenges from the pandemic…. As we kick-off 2021, we are confident that we are positioned to deliver another year of solid growth for USANA.”

China is currently USANA’s largest region, generating 47% of company’s global revenue. When asked about plans for international expansion during the investors’ call, Kevin Guest said their strategy for several years had been focusing on existing markets and on growth in those markets. Although they see now international expansion is a potential growth opportunity, it is not the primary strategic growth strategy for the company, he added.

USANA expects  $1.21 – $1.27 billion sales in 2021.

For more on USANA’s fourth quarter and 2020 performance, please click here.

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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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HERBALIFE

Herbalife reported $1.5 billion sales for the third quarter. This was an increase of 22% compared to the third quarter of 2019 and represented the largest quarterly result in company history. Just as significant, year-over-year growth was recorded in company’s all geographic regions but one.

North America’s growth was 55%, EMEA’s 38%, Asia-Pacific’s 10%, South & Central America’s 8%, and finally China’s was 5%. Mexico was the only region that reported negative growth (-5%).

After the third quarter, Herbalife announced its fourth quarter 2020 and full year 2020 outlook based on current business trends: 10-20% sales growth for the fourth quarter and 12.2-14.7% growth for the whole year. This shows us Herbalife is targeting this year to be a $5+ billion company.

Herbalife’s CEO John Agwunobi commented, “During the third quarter, we achieved another worldwide sales record, with reported net sales exceeding $1.5 billion and growth of 22.3% compared to the prior year. Three of our six regions, North America, Asia-Pacific and EMEA, along with 24 countries set new quarterly net sales records. We have also seen growth in our sales force, which is now the largest it has ever been.”

Some of the impressive growth performances at country level in Q3 were:  Turkey 137%, U.S. 50%, and Spain 43%.

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

NATURA &CO

Natura group’s third quarter was a remarkable one for all of its businesses. Growth performances were as follows: Natura &Co Latam +30%, Avon International +23%, The Body Shop +52%, and Aesop +67%. Consequently, group consolidated revenue represented 32% increase from last year’s Q3.

As for as individual markets are concerned, management specifically mentioned outstanding performances of Natura brand in Argentina, Mexico and Chile. Brazil, Russia and Turkey were Avon’s more successful markets in the third quarter.

From The Body Shop perspective, company reported a significant shift to direct sales and e-commerce. The Body Shop’s direct sales business grew by 333%, and e-commerce by 103% in the last quarter. As opposed to these more-than-satisfactory results, the performance of The Body Shop’s retail business was noted as showing ”slower recovery”.

Roberto Marques, Executive Chairman and Group CEO said, “Enabled by continued digitalization, our brands delivered strong results in the third quarter, with significant growth in sales and margin improvement. In an environment that has remained challenging throughout the world as a result of the Covid-19 pandemic, we delivered superior results compared to the CFT market both globally and in Brazil. Our performance this quarter attests to the strength of our fundamentals, our unparalleled Direct-to-Consumer reach, and the resilience of our omnichannel, multi-brand model.”

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

NU SKIN

Nu Skin CEO Ritch Wood’s comments after the third quarter were: “We generated revenue and earnings per share well above expectations. We drove revenue improvements in all but one reporting segment. We are outpacing our 2020 growth projections due to strong product demand and ongoing digital investments. We are also benefitting from the current environment where more individuals are working from home and shopping online. Currently, approximately 90% of Nu Skin revenue is coming from digital transactions.”

Nu Skin undoubtedly had a more than satisfactory quarter: 19% global sales growth with positive contributions from all its regions but China (-3%). Americas & Pacific grew by 81%, EMEA 72%, Southeast Asia 7%, Japan 6%, South Korea 5% and Hong Kong & Taiwan 4%. Management ties this high-growth in their Americas & Pacific region to the relaunch of the U.S. business. This relaunch project is branded as “Discover the Best U.S.””

With this Q3 performance, Nu Skin’s year-to-date revenue is almost the same as what it was in 2019. On top this, management announced its last quarter revenue expectation as $720 to $750 million. This will bring Nu Skin’s year-end revenue to $2.55 to $2.58 billion. This will be 6 to 7% yearly growth for the company.

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

ORIFLAME

Oriflame’s third quarter sales was €281 million, down 3% from the third quarter of 2019 (€289 million). Company’s year-over-year revenue growth performance is -6%

“The challenges from Covid-19 and its impact on the people and economies around the globe continue, and we stay humble navigating our path forward with care. So far, the fourth quarter shows a low single digit growth in local currency. We believe that the strength of our business model, products, digital tools and foremost our people will continue to build a stronger Oriflame,” said CEO Magnus Brännström.

Latin America (-17%) and Asia (-16%) were the two regions responsible for Oriflame’s negative growth in Q3. Turkey & Africa reported 10% revenue growth, Europe 9%, and CIS 7%.

Just like Nu Skin, Oriflame also benefitted from digital initiatives. Company said 97% of its global orders were placed online. Mobile use in the third quarter was 83% of total users and 64% of total orders were placed using mobile devices.

Following the third quarter, Oriflame’s year-to-date total sales is about 94% of last year’s.

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

TUPPERWARE

Tupperware reported figures that all looked promising this time: Its sales was $477.2 million in the third quarter, up 14% from Q3 of last year, average active sales force was up 10% and sales per active was up 10%.

The company said these numbers reflected “strong engagement by the sales force utilizing digital tools and techniques to bring Tupperware’s reusable products to market during unprecedented times”.

After this positive quarterly revenue figure, Tupperware’s year-over-year nine-month sales comparison is better now (-9% vs. 20% after Q2).

Looking into the regional performances, North America came up with an impressive +42% and Europe with +23%. Sales in the United States and Canada had the highest level of growth the company had seen in over 20 years and the highest level of absolute sales in the fourth quarter of 2002, as management stated. South America reported 4% sales increase and Asia-Pacific was the only region that performed worse (-6%).

Miguel Fernandez, President and CEO was happy after these results saying they “reflect a rapid adoption of digital tools by our sales force to combat the social restrictions surrounding COVID-19, and the increased consumer demand for our innovative and environmentally friendly products, as more consumers cook at home and are concerned with food safety and storage.”

During the earnings call, Vice Chairman Rich Goudis showed where the company was headed at:  “We’re shipping from a push model to both consumer pull and sales force push. We will enter more product categories where the Tupperware brand is given permission by the consumer. We will create a good, better, best product and pricing strategy to reach and address the needs of all consumer socioeconomic levels.”

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

USANA

Third quarter net sales increased at USANA by 15% year-over-year to $299 million. Company tied this to “strong product demand and successful incentive programs”. First three quarters altogether, USANA’s sales is 4% above last year’s.

“This was an all-around very successful quarter for the company. During the quarter, our strategies led to strong global customer demand for our high-quality nutritional products. We also offered various incentives and promotions that were well received and contributed meaningfully to sales and customer growth for the quarter,”  said Kevin Guest, CEO and Chairman.

USANA’s third quarter sales in Southeast Asia Pacific was up 41%, North Asia up 24% and China up 4%. Americas & Europe region also reported 10% growth. China is USANA’s largest market with about 45% share.

For the whole of 2020, management has increased its sales expectations to $1.090 – $1.115 billion (from $1.050 – $1.100 billion). This, if achieved, will mean 2020 will be a year of growth as compared to 2019. Last year, USANA recorded 11% revenue decline.

On the much-emphasized launch of “Active Nutrition” line, management said the target was early next year. It is planned to be a market-specific launch but not all at once due to the different regulations in the markets. The target audience for this line would be  “female, ages 25 to 35”.

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

As we approach the year-end, we have started getting more and more positive news from the industry. We are all eager to see the annual results.

(*) Please click below links to read about how these companies did before:
First Quarter, 2020
Second Quarter, 2020

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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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The post Direct Sellers Thrive in the Third Quarter appeared first on The World of Direct Selling.

Medifast for instance, reported 13% revenue growth in the first half of the year. Nature’s Sunshine’s figure was +0.6%. Mannatech’s sales on the other hand, declined by 5.6% in the first six months.

Shall we dive into some of the direct sellers’ reports more deeply? Let’s do it.

HERBALIFE

Following a very successful first quarter, Herbalife’s performance in the last three months was also in the positive direction: $1.346 billion sales with 9% global revenue growth. In fact, management announced the second quarter of 2020 was the largest quarter in Herbalife’s 40-year history in terms of “volume points”.

North America reported 39% quarterly sales increase, EMEA 14% and China 12%. On the other side, South & Central America region came up with 23%, Mexico with 21% and Asia-Pacific with 5% declines.

In the U.S., year-over-year volume points were at an all-time high and the monthly average number of unique customers increased year-over-year by more than 25% in the second quarter, the management reported. Additionally, some of European countries’ growth figures were very impressive: Spain 20%, Turkey 27%, France 55%, and the UK 90%. Herbalife distributors in Europe were able to adapt quickly to the new circumstances and transfer their businesses into a virtual environment, company said.

CEO John Agwunobi said, “As the numbers and facts demonstrates Herbalife Nutrition is performing at an exceptional level and we believe our distributors’ entrepreneurial spirit, combined with our quality line of nutrition products, will lead to continued growth. From a demand perspective, our business is backed by favorable consumer trends in an environment that has never been more responsive to what we bring to the table.”

For the remaining of 2020, the management announced that the extent and duration of business disruption and the impact from the pandemic could not be estimated so it would not provide a guidance.

For more on Herbalife’s Q2 performance, please click here.



NATURA &CO

Natura &Co’s first quarter revenue growth was 2%. This time it reported a significant decline: -13%.

Among the brands, Aesop recorded 35% growth in Q2 and The Body Shop increased its sales by 16%. However, the two of the larger brands posted negative growth figures: Natura &Co LATAM -17%, and Avon International -22%. Avon International also lost 36% of its active representatives in the seond quarter.

Natura &Co. LATAM composes of Latin American operations of the whole group, including Avon’s Latin American units. Within this, Natura was up 4.4% and Avon brand was down 35%.

Avon’s performances both in Latin America and in International units were tied to the impacts of lockdowns and the “cyber incident”. Management announced there were positive signs, though, in the third quarter.

Roberto Marques, Executive Chairman and CEO, commented, “Every brand and business in the group became truly omnichannel during the second quarter and given the circumstances, helped deliver a robust and competitive overall performance.”

For more on Natura &Co’s Q2 performance, please click here.

NU SKIN

Nu Skin reported $612 million sales in the second quarter. This is 2% less than its sales in Q2 of 2019 ($624 M). However, Nu Skin’s first quarter revenue was down 17%. So, this may indicate an improvement. Still, its global revenue growth as of mid-year is -9% compared to 2019.

Similar to the previous quarter, China contributed to this decline the most (-21%). China is Nu Skin’s biggest business unit. Its current share is 25% (down from 32% in mid-2019). Management was satisfied with China’s achievement in the second quarter saying it had performed close to where they had anticipated. At the beginning of the year, the anticipation was China to be down 20% to 25% and now Nu Skin expects it will be closer to 20%.

Hong Kong/Taiwan unit reported -15%, Southeast Asia -11%, and South Korea -9%. Positive performances were from Americas/Pacific (+38%), EMEA (+17%), and Japan (+5%). Management said growth in the last quarter was driven by the West, “where socially-enabled business is more broadly adopted”. Nu Skin had 51% customer growth in EMEA region led by the UK, Germany, Poland and South Africa. Company announced more than 85% of its global revenue was coming through digital transactions.

“Our business performed well above expectations in the second quarter of 2020 driven by our socially enabled business model, strategic investments in technology and manufacturing, and our balanced product portfolio,” commented Ritch Wood, CEO.

Nu Skin expects now to close this year with $2.37 to $2.45 billion revenue. Company’s guidance after the first quarter was $2.17 to $2.26 billion.

For more on Nu Skin’s Q2 performance, please click here.

ORIFLAME

Oriflame’s sales further declined in the last quarter (-12% compared to 2019) after the first quarter (-2%). Company’s total revenue is 7% less so far this year.

All regions of Oriflame reported declining sales in Q2: Latin America -34%, Asia -20%, Turkey & Africa -10%, CIS -2%, Europe -1%:

On the results, CEO Magnus Brännström said, “Despite a challenging start of the quarter, impacted by various lockdowns and difficulties to fulfil orders in several of our markets, we ended the quarter with local currency growth in June. The third quarter has started with around 10% local currency growth, implying that the reactivation initiatives taken during the spring have been effective and that our social selling platform is successful.” Oriflame reports that its supply was deeply impacted by the lockdowns in China, India and Italy.

In line with the general trend, company’s wellness product category was the best overall sales performer in the quarter, increasing its share to 18% from last year’s 13%.

As stated by the management, during the second quarter 97% of the Oriflame’s’ orders globally were placed online, of which 63% were from mobile devices. This is shown as a major factor behind reducing the negative impact on sales, when people stay at home due to the COVID-19.

For more on Oriflame’s Q2 performance, please click here.



TUPPERWARE

Tupperware has not seen a sales increase in a quarter compared with previous year since 2017. Company continued its downward trend in the second quarter of 2020.

Q2 sales was down 16% versus last year ($397 m vs. $475 m). South America contributed to this with -34%, Europe with -25%, Asia-Pacific with -14%, and finally, North America with -1%.  With this result, Tupperware’s mid-year revenue is 20% behind what it was in mid-2019.

Tupperware’s global active sales force also shrank in Q2 by 17%, declining to 467,000.

“In the second quarter we pivoted to a new way to lead the business, a new way to operate the company and embraced a new growth strategy. We are now increasing our efforts to contemporize Tupperware and become a global leader in sustainable consumer solutions while leveraging the consumer influence of our iconic brand,” commented Miguel Fernandez, CEO of Tupperware.

The management said Tupperware Board had approved a new growth strategy and they would share the full strategy later this year once they have “tangible accomplishments to point to”.

For more on Tupperware’s Q2 performance, please click here.

USANA

USANA reported $259 million in the second quarter. This represented 1% increase compared to previous year. Sales in Asia-Pacific region was up 2%, and in Americas-Europe Region it was down 2%. A large portion of USANA’s business is generated in Asia-Pacific. Markets in this region account for more than 80% of global sales. China alone produces about half of USANA’s revenue.

CEO Kevin Guest said, “We generated nearly 8% growth in active customers. We also continued to successfully execute a virtual sales and operating strategy to deliver our results. Finally, we offered several promotions and incentives during the quarter that benefited net sales and our overall results.”

As of mid-year, USANA’s revenue is flat versus 2019. After the second quarter, management increased its 2020 revenue outlook to $1.05 – $1.10 billion which if achieved, is in line with the sales in 2019.

For more on USANA’s Q2 performance, please click here.

There are reasons to be optimistic about the industry’s future. That’s for sure. We will see how the companies and the independent contractors will further adapt themselves to the changing conditions in the second half.

…..

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 A Glance at the Direct Sales Industry in Mid-2020 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.

 HERBALIFE

“As I close out my tenure as Chairman and CEO and prepare to hand off both of these positions to John Agwunobi, I want to express my sincere gratitude to our distributors and employees who have worked so hard to advance our mission to change lives and communities around the world. It has been an honor to serve and see the growth of this great company over the last 17 years,“ commented Michael Johnson, following the Q4 results.

John Agwunobi, who as previously announced will become CEO effective March 30, 2020, will also assume the role of Chairman of the Board, effective upon his election to the Board.

Herbalife reported $1.2 billion sales in the last quarter. This represented 2.8% growth versus prior year same quarter. This was achieved despite a 15% sales decline in China. Asia-Pacific was impressively up 18% and North America up 9%. The growth in Asia-Pacific was led by India, Indonesia, Vietnam, Malaysia and South Korea, all of which grew by double-digits, management said.

With this quarter, Herbalife ended the year with a revenue figure ($4.877 b) very close to last year’s ($4.892 b).

At this time, management refrained from giving any guidance for 2020, mentioning the difficulties in estimating the extent of impact from the Coronavirus. They said they would update its guidance for full year 2020 when they could reasonably estimate this impact.

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

NATURA

Natura had been on the headlines almost continuously throughout 2019 due to its Avon acquisition, a major transaction from many aspects. This operation was finalized early this year and the new entity (i.e. “Natura & Co”) started trading on the New York Stock Exchange on January 6.

Revenue-wise, last year was certainly a success for Natura. The consolidated net sales increased to 14,447 b. Brazilian Real (approx. US$ 3 b). That was 8% growth from previous year.

Natura’s consolidated sales included its direct selling arm Natura, The Body Shop and Aesop, all of which reported positive sales increases in 2019. Natura’s growth was 7%, The Body Shop’s 6%, and Aesop’s 23%. Natura is the largest unit of the three, generating more than 60% of the group sales.

These businesses reported strong results in the last quarter, too: Natura grew by 5% as compared to Q4 2018, The Body Shop by 7%, and Aesop by 26%.

Roberto Marques, Group CEO and Chairman of Natura &Co said, “2019 was another year of profitable growth and transformation for Natura & Co, as we continued to make significant progress in building a multi-brand, multi-channel, purpose-driven group that has now become the -largest pure play beauty company.”

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

NU SKIN

“In the fourth quarter our business performed in line with expectations,” said Ritch Wood, chief executive officer of Nu Skin. “Our customer base remained relatively strong however, our sales leader count was down in the quarter, primarily driven by a decline in Mainland China.”

Nu Skin’s last quarter global sales was $583 million, down 15% from prior year same quarter. Together with this, company closed the year with $2.420 b sales. This again, meant a 10% annual revenue decline.

Like Ritch Wood said, Nu Skin owed much of its revenue decline to its China market. Sales in China dropped by 29% or by $63 million (2/3 of Nu Skin’s overall sales decline) on a quarterly basis. That said, none of Nu Skin’s other units posted growth in Q4 (Japan did marginally).

For 2020, management announced their outlook as $2.17 billion to $2.30 billion revenue (or, 5 to 10% negative growth). They anticipate the overall business will return to growth in the fourth quarter of 2020, driven by the launch of a new beauty device. Their projected sales decline in Mainland China for the year is 20 to 25%.

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

ORIFLAME

Oriflame, once again in its history, was delisted from the stock exchange and has been a private company since mid-2019. As it continues reporting its figures and as it is a major force in the European direct selling industry, I have included it in this review.

Company reported EUR357 million sales in the last quarter. This meant 1% decline. Company’s annual growth in 2019 was also down 2%.

Oriflame complained in its report about the challenges in some of its main markets primarily in Asia & Turkey. The situation in Asia & Turkey, the management said was mainly as a result of a decrease in the number of registered actives. Latin America continued to deliver positive performance driven by Peru and followed by Mexico and Ecuador. Positive sales development was seen in Africa primarily driven by Nigeria while Europe declined due to sales force and activity reduction. CIS delivered an increase in local currency sales supported by a solid growth in productivity an increase in registered actives. The new market Uzbekistan successfully commenced sales operations.

Management stressed their focus on “online” in their year-end report. During the fourth quarter, 76% of the sessions on their website came from mobile devices and 96% of the company’s global orders were placed online, of which more than 55% came from mobile devices.

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

USANA

USANA reported $271 million in the last quarter and this was 9% less than Q4 of 2018. With this, company closed the year with $1.061 billion sales, a decrease of 11%. Company’s total number of active customers at the end of the fourth quarter was 586,000, compared to 616,000 in the prior-year period

CEO Kevin Guest was not dissatisfied, though, saying, “Our fourth quarter results were stronger than expected and allowed us to finish the year strong. Our performance was driven by a better-than-expected response to promotions we offered during the quarter, as well as improved general momentum in many of our markets around the world, including China. As we begin 2020, we acknowledge the evolving situation in China, where our customers, employees, and China’s health officials are responding to the spread of the coronavirus.”

China is a very important market for USANA, generating about half of company’s global revenue. In fact, USANA basically does not have strong presence in markets out of Asia. Total sales in Americas and Europe make up 20% of USANA’s total.

During the investors’ call, management made an early announcement and said they were planning to roll out a whole new product category in early 2021. This new product line is expected to offer customers a more holistic approach to their health and wellbeing.

USANA expects net sales between $1.03 billion and $1.13 billion in 2020.

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

We will have to wait now to see what this year will look like for the direct sales industry. Given the current situation we all have been in, most probably things will not be as good.

…..

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 2019 in a Few Major Companies’ Figures 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.

SHARE THIS ARTICLE:

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.

…..

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 2019 Means Declining Revenue for Some Major Direct Sellers appeared first on The World of Direct Selling.

He has lectured and published extensively on direct selling. Jeff is a graduate of the University of Southern California Law School. He is an active member of the State Bars of California and Oregon.

Guest Post by Jeff Babener
FTC vs. AdvoCare: A Teachable Moment for Direct Selling 

History is Written by the Victor

Ring the bells that still can ring
Forget your perfect offering
There is a crack, a crack in everything 
That’s how the light gets in
– Anthem, Leonard Cohen

Quiet Uncertainty

It was like the calm of quiet uncertainty before the storm. In May, 2019, 26-year-old leading direct selling company, AdvoCare, announced that it would exit MLM in favor of a one level direct sales model. It indicated that it was doing so, and “had no choice,” after confidential talks with the FTC. That was it. No other explanation. And the industry asked: What is this all about? It may be true, as T.S. Elliot said, “the world will end in a whimper, not a bang.” For a detailed article on the May withdrawal and ramifications, see AdvoCare Abandons MLM: Uncertainty Returns to Direct Selling.

A Jarring Dissonance

The FTC Speaks

And then, in October 2019, a cacophony, as the other shoe dropped. The FTC announced a stipulated judgment in which AdvoCare was proclaimed online and in newspapers across the country as a pernicious pyramid scheme that had swindled hundreds of thousands.

The settlement came with a $150m fine, life time MLM bans for AdvoCare’s CEO and top distributors, and the FTC spiked the ball in the end zone, noting at its press conference, “It is significant that we have a large and well known multilevel marketing company that is admitting that it operated as a pyramid… “

Sending an underlined message across the bow of the direct selling industry, the FTC online blog labeled the case as “the landmark settlement.”

Buyer’s Remorse

“Foul!,” called AdvoCare in an immediate responsive press release:

“The FTC incorrectly stated in a press conference that AdvoCare had admitted to operating as a pyramid. This is categorically false. AdvoCare forcefully rebutted this charge in its discussions with the FTC. To this day, AdvoCare denies it operated as a pyramid.”

Actually, AdvoCare was technically right… No such admission had been given (although it had stipulated to the veracity of the factual allegations in the Complaint), prompting the Director of the FTC Bureau of Consumer Protection to later apologize at the Washington, D.C. DSA Legal and Regulatory Conference.

A pyrrhic victory for AdvoCare, whose marketing program and opportunity for thousands of distributors was totally gutted. “Elvis had left the building.”

FTC Has Non-Legal Leverage. What Now?

This was the third major DSA member company hit by the FTC in less than 5 years. And the FTC accomplished its goals, without litigation, but rather the sheer leverage it had over the companies and individuals based on their unique factual situation. For Vemma, an asset freeze. For Herbalife, the overriding need to address its position as a publicly traded company. For AdvoCare, industry speculation about the unstated jeopardy of owners and board members, as well as existential threat to the business. For better or worse, the FTC accomplished its objectives in all three cases without taking the matter to formal adjudication. Therefore, the new quasi legal standards were set by FTC leverage, without firing a litigation shot, rather than by actual case law. Case law did not change.

Serious? To paraphrase a general counsel of one of the industry’s largest MLM companies: “Our first priority is not to prepare for a FTC confrontation, but rather to use our best efforts to stay off their radar in the first place.”

More to come? Could well be. The industry was left with a choice. It could wring its hands or treat this as a teachable moment for its future. As they say, a new reality, and “it is what it is.”

From the industry’s perspective, were the penalties draconian? Absolutely. Might it have been more appropriate to adopt a remedial solution rather than ban the entire MLM model? Absolutely. But that is another issue for another day.

The initial instinct of the industry was to recoil from a near death blow to a 26-year-old industry leader and longtime DSA member, complaining of a new era of FTC bullying. But, as the facts unraveled, some real concerns arise as “the crack in the bell lets the light in.” Maybe, it was not about bullying after all. The industry needs to pay serious attention and self- reflection about guidance it provides to its own companies.

Fact Checking the FTC and AdvoCare

What were the facts in issue from the standpoint of the FTC and AdvoCare? Well, as far as AdvoCare, we will never know. The company capitulated, without even filing one defensive document. And so, all we really can discern is what the FTC alleged. And from a legal standpoint, their version “stands” because, notwithstanding a preamble that states that AdvoCare neither admits nor denies any of the allegations in the Complaint, the stipulated order for permanent injunction and monetary judgment, recites:

VI.(D) The facts alleged in the Complaint will be taken as true, without further proof, in any subsequent civil litigation by or on behalf of the Commission against Settling Defendants…”

And so, we won’t really hear AdvoCare’s explanation. All we have is the uncontested FTC Complaint allegations. And history suggests that this “neither admit nor deny” stipulated order will morph into a “de facto” FTC guidance in the future.

The big picture said the FTC is that the facts support that AdvoCare crossed the line from operating a legitimate MLM program to a program that was instead an illegal pyramid scheme.

For the uncertainty created by no clear adjudication of such important issues, the industry owes “no thanks” to AdvoCare for its decision to merely “roll over,” despite contending after the settlement order that it had forcefully rebutted the pyramid charge in pre-settlement discussions with the FTC. Unfortunately, the “game over buzzer” had already sounded.

History Repeats Itself: Omnitrition Déjà Vu…

Other than ramped up aggressive enforcement and penalties (life time MLM bans for the CEO and lead distributors and forcing AdvoCare to abandon the MLM model), those looking for new insight in the AdvoCare prosecution, will not find it.

This was the opinion of the FTC and its Director of the Bureau of Consumer Protection, Andrew Smith, and a historical legal perspective would come to the same conclusion.

The AdvoCare prosecution can be summed up in a few words:

1. Inventory Loading. In other words, “pay to play,” “buy in to active qualification for “active” rank commissions and rank advancement commissions; purchasing far more product than realistically needed for either personal use or to meet resale demand to customers, focusing on recruiting business builders who buy inventory and encourage others to do the same.

2. Exaggerated Earnings Claims. It is eerie, but this is a “history repeats itself” moment. In 1996, in Webster v. Omnitrition, (79 F.3d 776) the U.S. Court of Appeals for the 9^th Circuit, held Omnitrition to be a pyramid scheme based on the company recruitment of business builders qualified with  inventory loading, who in turn, did the same. Omnitrition was co-founded by Charlie Ragus. In 1993, Ragus founded AdvoCare. It is a sad irony that 26 years later, the Ragus founded AdvoCare MLM program would be shuttered by similar inventory loading accusations as in Omnitrition.

The Omnitrition Court held that the well venerated Amway safeguards meant nothing if not enforced and if, in the presence of inventory loading:

The promise of lucrative rewards for recruiting others tends to induce participants to focus on the recruitment side of the business at the expense of their retail marketing efforts, making it unlikely that meaningful opportunities for retail sales will occur. Koscot, 86 F.T.C. at 1181. The danger of such “recruitment focus” is present in Omnitrition’s program. For example, Webster testified that Omnitrition encouraged him to “get to supervisor as quick as [he] could.” Ligon states:

[T]he product sales are driven by enrolling people. In other words, the people buy exorbitant amounts of products that normally would not be sold in an average market by virtue of the fact that they enroll, get caught up in the process, in the enthusiasm, the words of people like Charlie Ragus, president, by buying exorbitant amounts of products, giving products away and get[ting] involved in their proven plan of success, their marketing plan. It has nothing to do with the normal supply and demand in this world. It has to do with getting people enrolled, enrolling people, getting them on the bandwagon and getting them to sell product…

FN3… First, Omnitrition produced evidence of enforcement only for its ten customer rule. Even assuming that Omnitrition’s enforcement measures are effective, it is not clear that these measures serve to tie the amount of “Royalty Overrides” to retail sales. The overrides are paid based on purchases by supervisors. In order to be a supervisor, one must purchase several thousand dollars’ worth of product each month. That some amount of product was sold by each supervisor to only ten consumers each month does not insure that overrides are being paid as a result of actual retail sales.

Fast Forward 23 years and it all sounds the same. Said the FTC in its Press Release and Blog about AdvoCare:

Press Release:

AdvoCare operated an illegal pyramid scheme that pushed distributors to focus on recruiting new distributors rather than retail sales to customers. The compensation structure also incentivized distributors to purchase large quantities of AdvoCare products to participate in the business and to recruit a downline of other participants with the same incentives. The clear directive of this structure was, as one AdvoCare distributor explained during the company’s Success School training, to “recruit business builders who recruit business builders who recruit business builders…”

The FTC alleged that under the AdvoCare compensation plan, participants were charged $59 to become a distributor, making them eligible to receive discounts on products, and to sell products to the public. To earn all possible forms of compensation, however, participants had to become “advisors,” which typically required them to spend between $1,200 and $2,400 purchasing AdvoCare products and accumulate thousands of dollars of product purchase volume each year, according to the complaint. The FTC alleged that the income of AdvoCare advisors was based on their success at recruiting, with the highest rewards going to those who recruited the most advisors and generated the most purchase volume from their downline.

To recruit people, the FTC alleged, AdvoCare and the other defendants told distributors to make exaggerated claims about how much money average people could make—as much as hundreds of thousands or millions of dollars a year. The FTC alleged that distributors were told to create emotional narratives in which they struggled financially before they joined AdvoCare, but obtained financial success through AdvoCare. Distributors were also allegedly told to instill fears in potential recruits that they would suffer from regrets later if they declined to invest in AdvoCare.

The FTC alleged that the defendants told consumers that they could realize large incomes by promoting AdvoCare and that their earning capacity was limited only by their effort. For example, AdvoCare promoter Diane McDaniel told consumers that “the sky is the limit. I’m the variable. I get to decide what I truly want according to the effort I put forth” and that “there is incredible profit that can be made through infinity.”

In reality, the FTC alleged, AdvoCare did not offer consumers a viable path to financial freedom. In 2016, 72.3 percent of distributors did not earn any compensation from AdvoCare; another 18 percent earned between one cent and $250; and another 6 percent earned between $250 and $1,000. The annual earnings distribution was nearly identical for 2012 through 2015.

FTC Blog:

… people paid AdvoCare thousands of dollars to become “distributors,” buy inventory, and become eligible for cash bonuses and other rewards. But, the FTC says, AdvoCare rewarded distributors not for selling product but for recruiting other distributors to spend large sums of money pursuing the business opportunity. That push to recruit is a classic sign of a pyramid scheme.

On the earnings front, the FTC also alleged that AdvoCare earnings disclosures played fast and loose with earnings averages by extrapolating data of one month’s earnings into an annual earnings average, when in fact, the month chosen might not be a recurring event.

Legal observers are perplexed how it could happen after Omnitrition litigation that the same “front loading” fact pattern might occur again in a related successor company. Probably, the answer is that, unless one is extremely careful, these things just “creep up on you.

Unfortunately, the cultural problem was not new and was a bit of a “tiger by the tail.” The focus on recruiting and duplicating “front loading” business builders was suggested by a legal expert, who was also a former insider knowledgeable observer, to predate the FTC Order by more than a dozen years:

AdvoCare leaders encouraged new distributors to “buy their Advisor order” ($2,000) so they could begin earning commissions sooner. This was ingrained in the distributor culture… there were efforts made to discourage this and ensure that products purchased through “advisor orders” were sold to retail customers. …AdvoCare was a victim of its own success and it was unable to reign in leaders… Existing problems only become magnified when you go through a period of hyper-growth similar to what AdvoCare experienced.

Based on the “uncontested” alleged facts set forth by the FTC, serious pyramiding issues are raised. And that is all we have. Without a vigorous defense by AdvoCare, or, in fact, any defense at all, and based on the FTC Settlement Order providing that “facts alleged will be deemed to be true,” it is far more than a challenge for industry supporters to come to the support of AdvoCare in this dispute. This is a true loss for the direct selling industry. The silence of AdvoCare left the industry in an awkward uninformed position with no arrows in its quiver, akin to a performer on stage pleading, “Throw me a bone, I’m dying up here.”

State of the Law

The FTC and the direct selling Industry are totally in sync on one point:

Nothing about the FTC/AdvoCare settlement changes the existing legal standards for pyramid vs. legitimate direct selling. Those case law standards weave their way in FTC cases from the Koscot case through Amway through Burnlounge:

Koscot: Multilevel commissions must be based on sales to ultimate users.

Amway: Multilevel companies must adopt procedures that encourage retail selling.

Omnitrition: (9^th Circuit Class Action): In the presence of front-loading and lack of enforcement of the Amway standards, companies can expect pyramid challenges.

Burnlounge: The primary incentive to distributor purchases or payments should be a genuine need, whether for resale or personal use, as opposed to qualification in the compensation plan. Are distributor payments and commissions driven by recruitment and qualification in the plan, on the one hand, or sales to ultimate users?

Andrew Smith, FTC Director of the Bureau of Consumer Protection, was in total agreement, in his presentation to the October, 2019 Washington D.C. DSA Legal and Regulatory Conference.

In a well-received presentation, and to the surprise of many attendees, he emphasized multiple times that the FTC is supportive of the MLM model. He went out of his way to express his opinion that, in some ways, MLM is a superior business model because:

1. It provides flexibility and opportunity to individuals to earn extra income.

2. It provides a warm and attentive experience, and qualify products, to retail consumers.

He stated that the FTC welcomes compliant MLM companies. And his standards were not measurably different than existing case law.

The FTC seems to have retreated from its all-out assault on recognition of personal use, as argued and rejected by the BurnLounge court. Its attention is now turned to the basic question of whether a MLM program is placing its focus on sales to ultimate users, which includes personal use purchases in reasonable amounts and wholesale purchases for resale, in amounts reasonably calculated to fulfill retail consumer demand and for which the company can track the flow of product to ultimate users such that compensation reasonable relates to sales to ultimate users. (As an aside, the Director played slightly “fast and loose” in describing the Koscot test as paying compensation “unrelated to product sales,” omitting three key words of Koscot, “to ultimate users,” thus leaving the erroneous impression that only product sales to non-participant retail customers should count. Such a position would be a misrepresentation by omission of the Koscot/BurnLounge standard.

But overall, Director Smith’s description of the state of the law seemed consistent with case law. He suggested this analysis:

1. Does the scheme emphasize recruiting over sales to consumers? Are compensation results driven by recruiting others? Are distributors focused on recruitment and duplication rewards arising from recruiting other distributors to “buy?” Does that plan have a qualifier relating to recruitment?

2. Does the program have incentives to buy goods that are not based on satisfying a distributor’s own personal needs or reasonable inventory to supply retail customers? A telltale pattern would be monthly purchases just enough to meet compensation qualification activity requirements. Another would be front-loading which Director Smith indicated as an attribute of pyramid schemes. His observation of AdvoCare was that distributors were encouraged to buy and did buy for more than they reasonably needed or could use.

 He stated that the FTC key questions are:

1. How do distributors really make money in the plan?

2. Does the company have incentives that promote recruiting and purchasing over sales?

3. Is the company gathering data to track product sales to end consumers?

Director Smith stressed:

1. At the FTC, we want you to be successful as a MLM.

2. However, we also want you to be in compliance as an MLM.

3. Effectively, he said, “we are not looking for a fight, and we want you to stay off our radar,” and he implored companies to examine and reexamine their programs to remove any practices that would put a company on the FTC radar.

4. He stated the FTC position, which no one in the industry disputes, is that a pyramid headhunting inventory loading recruitment scheme is unsustainable as a business model.

Unless completely cynical, given the tenor of his presentation, it seems fair to take Director Smith at his word. Refreshing! The industry can live with this going forward.

Guidance for Radar Avoidance in a Post-AdvoCare World

Every breath you take
Every move you make…
I’ll be watching you
– Every Breath You Take, Sting, The Police

If you are looking for life in a post-FTC vs. AdvoCare/Herbalife/Vemma world, here are some common sense guidelines to create the strongest defense to your MLM program and for promoting anti-pyramid practices aimed at staying off the FTC radar:

1. Overriding Goal… The Big Picture.

The compliant MLM “acid test” will be a mandate and demonstration of significant sales to non-participant retail customers. Bottom line analysis by FTC and state AGs:

A product or service with real retail customers and a good ratio of retail customers to distributors to demonstrate that people buy the product because they want it, and not just to qualify in the marketing plan.

Upline commissions must derive from sale of product to ultimate end users.

With a high retail customer to distributor ratio, experience suggests that most other legal issues (assuming no outrageous earnings or product claims) tend to recede into the background.

2. Track. Track… Flow of Product to and Use by the Ultimate User.

After Vemma, Herbalife and AdvoCare, few priorities are as important as tracking and verifying the flow of product to and use by the ultimate user, whether it be a nonparticipant retail customer or distributor for personal/family use. The short answer: Track the flow and use of product to both nonparticipant retail customers and distributor personal/family use. In fact every company and the DSA should launch a joint initiative with leading direct selling software companies to develop software which accurately tracks the flow of product such that a company can demonstrate that distributor purchases are, in fact, in reasonable amounts for distributor personal use and reasonable inventory quantities for resale, calculated to meet the ordering needs of retail customers. And software should track that every product sold is used by the ultimate user, whether for personal use by distributors or use by non-participant retail customers.

3. Promote Non-Participant Retail Sales and a Preferred Customer Program.

It is in everyone’s interest, the company, distributors, the industry and regulators, to place an emphasis on retail sales to non-participant customers. After all, the business is called “direct selling,” and not “direct consumption.” The promotion of retailing should find a thread through every piece of company literature and advertising.

In addition the gold standard of retailing is the presence of non-participant preferred customers, i.e., those retail customers that are provided incentives and discounts to commit to monthly or orderly product purchases. From a legal standpoint, a robust preferred customer program makes the statement that there is a real market for the product and purchasers are purchasing because they want the product as opposed to being motivated by qualifying in the business opportunity.

4. Time to Rethink Personal/Group Volume Qualification Requirements for Active Status, Rank Status, Rank Advancement Commission Payout if the Volume is Based on Distributor Purchases that are Not Clearly Documented as End User Personal Use of Distributors or Retail Customers.

In fact, some leading direct selling companies have already initiated elimination of volume requirements for active status, fast start commissions, rank status, rank advancement and payment of enhanced commissions. The FTC has long expressed a deep concern for volume requirements that tend to trigger inventory loading or distributor purchases that are not driven by consumer demand, but instead for purposes of qualification.

Said Former FTC Commissioner Edith Ramirez in her remarks at the DSA Business and Policy Conference in September, 2016: “Any requirements or incentives that participants purchase product for reasons other than satisfying genuine consumer demand – such as to join the business opportunity, maintain or advance their status, or qualify for compensation payments—are problematic.”

In Vemma and Herbalife, companies were restricted on credit that could be accorded to distributor purchases, whether for personal use or resale. Many companies are reconsidering volume requirements that are documented as reasonable personal use or retail sales. Unless a company is prepared to track end destination of product, it should reconsider volume requirements that cause suspicion that the products are purchased to qualify and not driven by consumer need.

Above all, rewards should reasonably relate to sales to end users (personal use plus retail customers.

There are multiple approaches to compensation for multilevel payments on downline purchases.

(a)      The Herbalife settlement limited credit to downline distributor purchases (only about one-third of distributor purchases qualified for credit for MLM commissions.)

(b)      Pay MLM commissions only after verification of personal use or sale.

(c)      Pay MLM commissions at time of purchase, but absolutely track and verify personal use and sale of product purchased for resale.

5. Rethink Distributor Ordering Methods that Produce “Inventory Loading” Accusations. Use a Ramp-Up Authorization Approach that Authorizes Increasing Wholesale Orders Based on Demonstration of Retail Sales.

Above all: Do not allow distributors to purchase more than they can use for reasonable personal use and/or quantities for there is a realistic resale to retail consumer need.

Actually, in today’s world of next day UPS and FedEx, online ordering and direct to consumer shipping, there really is no need any more for large inventory purchases or stocking distributors.

Approaches for Avoiding Inventory Loading:

(a)      Eliminate or reduce volume requirements for active, rank, rank advancement.

(b)      Allow volume, but track and pay only on personal use level of volume or wholesale for resale volume that is verified sold to retail customers.

(c)      Limit amount of inventory or, at least, install a ramp-up authorization based on demonstrated sale and/or personal use.

6. Bulletproof Yourself on Earnings Claims. Don’t be the Nail that Sticks Up and Gets Hammered Down.

Avoid earnings hype in advertising, testimonials and lifestyle presentations. Scuttle the Maserati and the Tuscan villa images. Be realistic… this is the anomaly and not the norm. Take the bullseye off your forehead. In almost every FTC case, the first invitation to regulators is unrealistic earnings claims. The hype “opens” the door or lifts the canopy of the tent. And, as they say, “Once the camel has his nose in the tent, you can be assured that his ‘body’ will soon follow.”

In other words, don’t be the low-lying fruit. Don’t effectively, and unintentionally, “bait” the FTC to initiate an enforcement action by over-aggressive hype and promises.

Absolutely do not make claims of wealth, fast wealth, easy money or sure-fire systems, nor effectively invite the FTC to inquire into a program based on earnings hype and systems based on distributor “purchasing” rather than distributor “selling” and “using.”

And whether legal or not, now is the time to “ditch” the pictures and videos of distributor mansions and luxury cars. Since such MLM-driven lifestyles are clearly the exception to the rule, why wear a red flag in front of a “bull.”

7. Post a Transparent Earnings Disclosure.

As a general matter, the FTC is all about disclosure so that consumers can make informed decisions. Once you have a track record, post a simple and transparent average earnings disclosure. At a minimum, you should disclose:

(a)      What percentage of distributors who have signed up are active, i.e., earning any income?

(b)      Of those that are active, what is the average earnings?

(c)      If any example, testimonial or illustration of a particular income, bonus or lifestyle award is presented, what percentage of active distributors earn at least that amount or above?

(d)      Unless the company surveys average costs of doing business by distributors, earnings averages should be represented as “gross earnings” and that they are not “net earnings.”

(e)      Absolutely disclaim that any earnings illustrations are representations of an expectation of earnings.

(f)       “Pepper” promotional material with average earnings disclosures and disclaimers at every instance that an illustration/testimonial of earnings potential is
provided.

(g)      Either calculate average business costs to disclose net earnings or specifically disclose that average earnings are presented as “gross,” as opposed to “net” and do not take into account distributor business costs.

Irrespective of the depth of the earnings disclosure, do not ever play fast and loose with earnings disclosures, nor “parse” to exaggerate the opportunity.

During his presentation to the DSA Legal and Regulatory Conference, FTC Director raised a new “ask” by the FTC. He suggested that companies should not only present gross earnings, but should also present net earnings which take into account costs of doing business by distributors. Upon questioning, he recognized that this may be a daunting task. At the very least, he suggested that companies should disclose that their typical average earnings disclosures are “gross earnings” and, not net earnings, i.e., they do not take into account distributor costs of doing business. Look for more of this “ask” in the future.

8. Adopt, Follow and Enforce the Amway Safeguards.

The Amway safeguards have been the gold standard and been honored in case after case going on 40 years. Although the FTC may wish to pivot away from the Amway safeguards, the courts have not done so.

(a)      70% rule to avoid inventory loading… no ordering unless 70% of previous orders have been sold or used for personal/family use. Place lids on initial orders and allow a ramp up of size of order over time. Never mandate monthly autoship to qualify for commissions. And avoid front-loading. In the famous Omnitrition case, the court noted that the Amway safeguards are rendered ineffectual as a defense to pyramiding if a company encourages or allows front-loading of product because it becomes clear that commissions are not related to sales to ultimate users when distributors are incentivized to buy huge amounts of inventory that are out of proportion to needs for resale or the needs of personal and family use.

(b)      Adopt and enforce an actual nonparticipant retail sales mandate to qualify to receive commissions. Over the years, that number has been expressed in numbers from five to ten or in sales volume … often with an allowable ramp up over time.

(c)      Honor a buyback policy on inventory and sales support materials for terminating distributors… no less than 90% for 12 months.

9. Consider a Reclassification Program to Convert Non-Earning Distributors to Preferred Customers.

In a new FTC enforcement era, the “name of the game” is demonstrating high ratios of non-participant retail customers to active distributors. In the retailing analysis, non-participant retail customers, who are provided discounts or other incentives in exchange for signing up as “preferred customers,” are like “gold” in “upping” the ratios. Watch for direct selling companies to use major initiatives to convert to preferred customers distributors who are loyal product purchasers, but who are not really “working the opportunity,” i.e., low or no earning in the direct selling opportunity.

The conversion can be voluntary or non-voluntary.

1. Voluntary.

For instance, in the Herbalife settlement, Herbalife was given nine months to work on a reclassification of brand loyal, but low earning distributors, to preferred customers so that the non-participant retailing ratios would be increased for personal use purchases. Other leading companies, such as USANA, followed suit, substantially increasing retailing ratios.

2. Involuntary.

Another path that companies may wish to consider is automatic involuntary conversion. Under this approach a company would adopt an automatic reclassification program that automatically reclassifies non-earning independent representatives to preferred retail customers, all the while providing superb discount pricing, special customer benefits, generous customer appreciation referral rewards. If the converted preferred customer later decides to reactivate, the company might even consider providing an option for the right, after a waiting period or based on customer referral activity, to re-sign up as an active independent representative in a reserved genealogical downline position.

10. Promote Industry Guidance on Compliant Compensation Plans.

Similar to the DSA initiative on earnings claims compliance of the Direct Selling Self-Regulatory Council (DSSRC), support the launch of a DSA task force to develop best practices compensation plan guidelines and to continuously audit and constructively advise member DSA companies for avoiding pyramiding accusations of the sort raised by the FTC in Vemma, Herbalife and AdvoCare.

11. Support Clear Federal Legislation on Direct Selling.

Companies should actively support DSA federal legislative action to set forth clear anti-pyramiding guidelines so that the FTC, states and companies are playing on the same field with the same rules and goalpost settings.

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Mark dropped out of school in the ninth grade. He started using drugs. “I was a little delinquent. I got in trouble with the law,” said Mark. At the age of 16, he was sent to a school for troubled youngsters. As a part of his rehabilitation program, Mark was required to raise money for by selling raffle tickets, and he quickly became the school’s best salesman.

In 1975, his mother died of a drug overdose when Mark was 19. Conducted tests showed very high levels of a painkiller in her system. This is an event that would then become a part of the story behind the empire that Mark would build.



Herbalife, one of today’s largest direct selling enterprises, was launched in Los Angeles by Mark Hughes, this high school dropout and a juvenile delinquent. The year was 1980 and Mark Hughes was 24. His main product was Formula 1, which at the time came only in vanilla flavor. The company was stating its goal as to sell healthy weight loss products and to change the nutritional habits of the people.

His company became a success shortly. Sales was $2 million in its first year, $10 million the next year. Herbalife launched in Canada in 1982 as its second market. The same year its revenue reaches $58 million and it installs its first computer system. Herbalife’s sales was $300 million by 1985. Herbalife went public and got listed on the NASDAQ in 1986.

The same year, Jim Rohn, a well-known business philosopher and motivational speaker, teamed up with Herbalife. “Lose weight now/Ask me how!” had become a very popular slogan embraced by Herbalife distributors carrying it as lapel pins or bumper stickers everywhere.

By the year 2000, Herbalife was already operating in more than 40 countries all over the world. But Herbalife’s 20^th anniversary year was also marked by a very tragic event. Its charismatic founder Mark Hughes was found dead at the age of 44 in his mansion.

The findings showed that the reason behind was the mixing of overdose of alcohol and an antidepressant Mark had been using. According to the coroner’s report, Mark Hughes had died after a four-day drinking binge. The same report said he was being treated for his drinking problem and was also smoking six to eight cigars a day.

Alongside the loss of this visionary leader who ran the company for 20 years, one can also imagine this event’s negative publicity impact on a company that had been championing health and well-being.

After this tragic death of Mark Hughes, Herbalife entered into a period of chaos. This included a legal war around Alex Hughes, Mark’s then 13-year-old son who was the sole beneficiary of the estate. This era then, would be remembered with “allegations of adults lining their pockets at the teenager’s expense, of sexual harassment of his mother, a former beauty queen, and of lengthy personal vendettas”.



Following a series of events and turmoils, Herbalife transformed into a more professionally-run company and was re-listed on the stock exchange, this time on the NYSE. Herbalife currently operates in more than 90 countries, with over 8,000 employees in its offices around the world. It is now the world’s third largest direct selling company with a global revenue of close to $5 billion targeted for this year.

Had this event not happened, would Herbalife have been more or less successful than it is now? It is not possible to know. However, it would have been a very different company in many aspects, for sure.

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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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The post A Page in the History of Direct Sales: The Death of Herbalife’s Founder Mark Hughes appeared first on The World of Direct Selling.

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.

…..

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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