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



AVON

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

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

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

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

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

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

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

HERBALIFE

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

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

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

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

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

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

NU SKIN

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

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

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

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

TUPPERWARE

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

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

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

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

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

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



USANA

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

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

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

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

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

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

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

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

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The post 2019 Means Declining Revenue for Some Major Direct Sellers 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.

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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 Direct Selling Giants’ Growth Performances, Mid-2019 appeared first on The World of Direct Selling.

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

AVON

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

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

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

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

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

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



HERBALIFE

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

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

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

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

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

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

NATURA

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

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

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

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

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

NU SKIN

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

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

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

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

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



ORIFLAME

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

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

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

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

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

TUPPERWARE

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

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

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

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

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

USANA

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

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

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

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

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

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

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The post The 7 Giants’ 2018 Growth Review appeared first on The World of Direct Selling.

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

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

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

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

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

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

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

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

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

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

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

However, September saw two interesting happenings:

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

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

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

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

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

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

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

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The post Will Avon’s Turnaround Be Real This Time? appeared first on The World of Direct Selling.

Once again, the article will focus on these companies’ revenue growth performances.

AVON

Following many quarters with disappointing sale figures, Avon started the year with a 5% revenue increase achieving $1.4 million worldwide sales.

Yet, company’s new CEO Jan Zijderveld was not happy. He said, “Avon’s first-quarter results were unsatisfactory and do not represent the underlying potential of the business.”

In fact, out of four regions, only EMEA came up with a meaningful sales increase (12%). EMEA is Avon’s largest region, generating more than 40% of its global volume. North Latin America was up 1% in the first quarter, South Latin America was at par (0%), and Asia Pacific reported 2% decline.

When it comes to the active representatives on the field, the situation was even worse as all four regions reported decreases: Asia Pacific and EMEA each -1%, and North and South Latin America each -6%, bringing the global figure to -4% as compared to Q1 of 2017.

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

Following the first quarter, Avon announced it had sold its business unit in Japan to LG Household and Health Care for approximately $96.5 million.

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

HERBALIFE

Herbalife closed the first quarter with a solid 7% increase in its global sales. Company’s Q1 revenue was $1.2 billion this time.

Just like it was Avon’s, EMEA was also Herbalife’s star region during the last quarter. Revenue increase was over 18% in EMEA. Sales grew in Asia-Pacific by 12%, in Mexico by 9%, in South & Central America by 3%, and in North America by 1%. The only decline came from China (-2%). Management stressed the importance of the newly launched products in getting these results. Herbalife reported it had introduced over 60 products in this last quarter globally.

CEO Rich Goudis was more than satisfied with his company’s performance. “In the first quarter, we exceeded expectations as we return to growth in the U.S. ahead of schedule and, as such, we raised our financial outlook for the year. This is an exciting time for the company,” he commented during the investors’ call.

So, Herbalife management was even more optimistic following these results, stating their second quarter sales increase target as 8.5%-12.5%. Herbalife’s full year target for 2018 is 9.0%-13.0% over last year. If achieved, Herbalife will have between $4.8 billion to $5 billion revenue by the end of this year.

A few weeks ago in April, the company announced its strategic name change from “Herbalife” to “Herbalife Nutrition”. Rich Goudis explained the reasoning behind this move, “Our new name, Herbalife Nutrition, reflects our strategic transformation as a leader in the nutrition industry.”

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

NATURA

Brazil’s Natura described its first quarter performance as “another solid growth in sales and profitability across the group”. In fact, Natura’s net revenue increase during Q1 was 56% versus prior year’s same period, reaching R$2.7 billion (approximately, US$750 million). This included three months of additional revenue from The Body Shop.

The group’s main line, Natura’s quarterly growth was 7% over prior-year. Its Brazil unit grew by 1% and its LATAM division by 23%. Natura has over 1 million consultants on the field.

The group has recently been re-branded itself as Natura & Co. Currently, Natura accounts for 62% of the group’s net revenue, The Body Shop for 30%, and Aesop for 8%.

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

NU SKIN

Nu Skin achieved an impressive 23% sales growth in the first quarter and all of Nu Skin’s regions contributed to this. The highest percentage growths came from China and EMEA (both 32%). Americas/Pacific region’s contribution was 29%. China is Nu Skin’s largest market that accounts for about 1/3 of Nu Skin’s global revenue.

After having reached $616 million sales in Q1, CEO Rich Wood said, “Our revenue growth was driven by an 11 percent increase in customers and a 16 percent improvement in the number of sales leaders. We are encouraged by the early execution of our growth strategy centered on engaging platforms, enabling products and empowering programs.”

During the earnings call following the first quarter, Nu Skin management explained their growth strategy that had focused on three key pillars: Platforms, Products, and Programs.

For the second quarter, Nu Skin expects $630 to $650 million sales. This is 15% to 18% growth over prior year. And Nu Skin announced its 2018 revenue guidance as $2.51 billion to $2.56 billion, that is 10%-12% yearly growth.

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

ORIFLAME

Oriflame reported disappointing growth results this time. Its €330.8 million quarterly sales meant a 2.6% decline. Without the one-time impact of the new reporting standards the company announced it had started implementing, the decrease would still have been 2%.

In the first quarter, only one region recorded sales growth and that was Oriflame’s largest region, Asia&Turkey (9%). The rest reported declining sales: CIS (-17%), Latin America (-4%), and Europe&Africa (-2%). Once a very important region for Oriflame, CIS (i.e. Armenia, Azerbaijan, Belarus, Georgia, Kazakhstan, Kyrgyzstan, Moldova, Mongolia, Russia, Ukraine) seems to continue being a problem.

Oriflame’s active global sales force grew by 1% and reached 3.034 million. However, Oriflame owed this global growth only to the performance in Asia&Turkey, the active sales force declined in its all other regions.

Oriflame’s unit sales dropped by 6% and sales per active by 4% during the last quarter. From the category perspective, the management was especially happy with the performances of skin care and wellness as both achieved double digit sales growth during the quarter.

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

TUPPERWARE

Tupperware joined Oriflame in the first quarter to report a sales decline: -2.2% with $543 million revenue. Its total sales force of 3.1 million was also down 2%.

At the country level, the most significant positive contribution to the first quarter results in local currency was in China, the management said. This was along with good results in Argentina, CIS, Fuller Mexico, Malaysia/Singapore, Tupperware Mexico and Tupperware South Africa. The local currency sales decreases were most significant in France, Germany and Italy, partially offset by the United States and Canada. Tupperware United States and Canada’s sales were up 9%.

During the earnings call, CEO Rick Goings commented on the results, “As you’ve seen in the first quarter it was a disappointment, down 2% in dollars, while local currency sales decreased 6%, which was below the low-end of our January guidance range of 3 points.”

Patricia Stitzel takes over as CEO so this was Rick Going’s last earnings call participating in as Tupperware’s chief executive. He said on this, “In the direct selling industry, there have been numerous horror stories regarding new leadership taking over a company with no industry knowledge. That continues to this day. And I’ve got to say that’s not the case here.”

Management expects -2% to 0% growth for the second quarter, and -1% to 1% for the whole year of 2018.

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

USANA

With a global revenue of $292 million, USANA grew by 14% in the first quarter. The company’s total number of actives also increased 1.9% year-over-year to 585,000.

USANA’s North Asia region reported 40% sales increase, Greater China 20%, and  Southeast Asia Pacific 12%. Sales in Americas and Europe decreased by 1%.

More than half of USANA’s global business is being generated in China where it has been voluntarily conducting an internal investigation of its China operations, BabyCare Ltd as announced in February 2017. The investigation focuses on compliance with the Foreign Corrupt Practices Act and also certain conduct and policies like expense reimbursement policies. The company said it could not predict the duration, scope, or result of this investigation.

“We are off to a solid start to the year as we continue to see strong momentum in most of our regions around the world,” said Kevin Guest, USANA’s CEO.

USANA plans to open four new European markets, Germany, Spain, Italy and Romania in June this year. In preparation for this, company said it had already made products available on a not for resale basis in these markets.

After the results in the first three months, management announced its 2018 net sales target as $1.13 and $1.17 billion (previously between $1.11 and $1.16 billion).

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

This concludes are brief analysis of a group of seven public direct sellers. We will wait and see how their results will evolve in the rest of 2018.

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

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The post Direct Sales Giants’ First Quarter Results appeared first on The World of Direct Selling.

This week’s article will be a review of six of the largest public direct sales companies’ 2017 growth figures. Although they cannot represent the whole global industry, how these “biggies” have been doing surely gives an idea:

AVON

Avon’s Q4 2017 sales was at par with its previous year same period sales: Approximately $1.6 billion. This brought the company to $5.7 billion which was also almost the same as Avon’s 2016 performance.

Avon’s largest region South Latin America grew by 4% to $2.2 billion in 2017. The rest of the three regions concluded the year with negative growths: Asia-Pacific -6%, North Latin America -4% and finally, Europe, Middle East & Africa -1%,

The weakening on the field was even worse with the company’s active representatives declining by 3% in 2017. All four regions contributed to this with their negative performances.

Besides the not-so-good news from the revenue side, Avon management’s reports on the profit side made the investors happy this time: Avon realized more than $250 million of cost savings, exceeding its target of $230 million for 2017. This impacted its profitability positively and increased its operating profit by 21% in Q4, bringing a net income both quarterly and annually. This was the main reason that moved Avon’s share price from $2.14 to $2.94. It was only a few weeks before that, some of Avon’s institutional shareholders were so pessimistic that they had wanted the company to sell itself to an investor.

Jan Zijderveld, the newly-appointed CEO of Avon said, “Many people have asked me why I was attracted to this role… I came here because I can make a difference. Avon is operating in a dramatically changing consumer and competitive environment and business as usual is not an option. The Board has given me a clear mandate to dive deeply into all aspects of this business.”

Avon management did not expect the closure of Australia and New Zealand that will happen this year to have any negative impacts. CFO Jamie Wilson said the business there had been a net loss position for a number of years and with the exit, that loss would no longer hit their results.

In January this year, New Avon, the North American unit that Avon had sold before, launched a food supplements line and got into a new category. Whether if and when these products will be made available in Avon’s other markets has not been disclosed yet.

For more on Avon’s 2017 performance, please click here and here.



HERBALIFE

Herbalife’s revenue growth in the last quarter was 5%, bringing the quarterly sales to approximately $1.1 billion. Despite this, company’s sales was down 1% on an annual basis.

EMEA was the most successful of Herbalife’s regions in 2017 achieving a 7% growth. With its $869 million annual volume, EMEA is now company’s third largest region after Asia-Pacific (0% growth in 2017) and China (2% growth in 2017). Mexico’s sales declined by 1%, South-Central America’s by 3% and last but not least, North America’s by 12%.

The revenue decrease in North America was $116 million last year, taking it from its “pole position” to fourth in one year. CEO Rich Goudis said during the earnings call that this decline had slowed down in the US: -19% in Q2, -17% in Q3 and -8% in Q4.

“After a year of transition, we returned to net sales growth in the fourth quarter as expected, and we anticipate stronger net sales growth for the full year in 2018,” said Rich Goudis. For 2018, Herbalife’s expectation is to reach a net sales growth of 5.5 to 9.5% versus 2017.

Herbalife announced a new executive organization structure effective May 1, 2018. According to this, President Des Walsh is transitioning to the new role of Executive Vice Chairman. Concurrently with this, CFO John DeSimone will assume the role of Co-President and Chief Strategic Officer. Current Sr. VP Bosco Chiu will be promoted to Executive VP and CFO, general counsel Richard Werber will assume the new role of Chief Legal Officer and Sr. VP and Chief Compliance Officer Henry Wang will be promoted to Executive VP and General Counsel.

For more on Herbalife’s 2017 performance, please click here and here.

NU SKIN

Thanks mainly to the growth performances achieved in China (+18%) and its Americas region (+15%), Nu Skin achieved 3% sales increase in 2017, globally. These two regions’ Q4 growths were exceptionally phenomenal: Quarterly revenue increase in China was 60% and in Americas it was 33%. These two regions together generated 45% of Nu Skin’s volume. In fact, Nu Skin has not much business in the U.S. Company’s CFO Mark Lawrence said during the earnings call, “… the vast majority of our revenue and all of our profit, virtually all of our profit is overseas.”

EMEA’s annual revenue was up 9% in 2017 and South Asia/Pacific’s 1%, whereas South Korea ended up with -13%, Hong Kong/Taiwan with -9%, and Japan -8%.

Last year’s $2.279 million revenue also meant the end of a three-year-long era of declining sales for Nu Skin. This also put the company ahead of Tupperware as of end-2017. But still, Nu Skin’s 2017 sales is far from its 2013 revenue when it peaked at $3.177 million.

“We concluded 2017 on a high note with solid quarterly results driven by customer and sales leader growth.Our growth strategy, which remains focused on three key elements – engaging platforms, enabling products and empowering programs, continues to drive our positive results,” said Ritch Wood, Nu Skin’s CEO.

For 2018, Nu Skin announced it expected annual sales of $2.44 billion to $2.49 billion, and if this happens, that will be a 7 to 9% growth.

For more on Nu Skin’s 2017 performance, please click here and here.

ORIFLAME

Oriflame closed the year with an impressive 9% revenue increase. The company’s fourth quarter sales was EUR 380 million (up 7% from last year) and the year-end result was EUR 1.363 million. Despite this, Oriflame’s annual sales in 2017 still was lower than that of 2013 (EUR 1.407 million).

Unit sales in Q4 increased by 4% and the price/mix effect was up by 10%. This positive mix effect was attributed by management to “a combination of geographic and product mix, mainly driven by skin care and wellness”.

The positively contributing regions to this yearly 9% global sales increase were: Asia & Turkey (17%), CIS (10%), and Latin America (6%). The only sales decrease came from Europe & Africa (-1%). For several years, CIS region (Armenia, Azerbaijan, Belarus, Georgia, Kazakhstan, Kyrgyzstan, Moldova, Mongolia, Russia, Ukraine) has been a headache for the company with its continuously diminishing sales. This region (Oriflame’s second largest after Asia & Turkey) succeeded to report Euro sales growth in each of the four quarters in 2017.

CEO Magnus Brannstrom was happy with the results saying, “2017 was another year of healthy Euro growth and double-digit local currency growth. We delivered very strong profitability improvements…  Our strategic categories – Skin Care and Wellness sets and routines –  served as significant drivers of growth and price mix development.” In fact, Oriflame’s skin care (28%), and wellness (11%) categories together accounted for 39% of its global sales in 2017.

Oriflame management also announced that 94% of company’s global orders were placed online last year and approximately 2/3 of visits to its websites came from mobile devices.

For more on Oriflame’s 2017 performance, please click here.



TUPPERWARE

Following $589 million sales in the last quarter of 2017 (down from last year same period), Tupperware ended the year with $2.256 billion sales. Apart from South America (+6%), all of its regions brought negative growths in 4Q.

This situation was the final result for whole of 2017, too. On an annual basis, sales in South America increased by 20%, whereas each of Europe and Asia-Pacific reported -2% and North America -1% revenue growth. So, basically in 2017, Tupperware owed its 2% global sales increase to South America’s 20% regional growth.

At the markets level, Tupperware’s stars in the last quarter of 2017 were China (+33%), CIS (-18%), Mexico (+13%) and Brazil (+4%). Brazil is Tupperware’s largest market with its volume exceeding $300 million. China made over $200 million and has become the third largest (US & Canada, the second). Among those that disappointed were Indonesia (-21%), India (-19%), Italy (-12%), South Africa (-7%), and France (-6%).

In the fourth quarter, Tupperware announced it would close down its manufacturing and supply chain facilities in France. Management admitted during the earnings call that while they found it a necessary move, it impacted both the sales force and the consumers, resulting in undesirable numbers especially in France, Germany and Italy in the end.

After having declining sales for three consecutive years since 2013, last year was the first with a positive growth. For 2018, Tupperware announced it expected 2 to 4% sales increase, globally. Assuming the high-end (4%) is achieved ($2.346 b), Tupperware’s global sales will still be lower than that of its 2014 figure which was $2.606 b.

Tupperware last week announced Patricia A. Stitzel as the new CEO. Rick Goings has been at this post since 1996 and from now on, he will serve as Executive Chairman.

For more on Tupperware’s 2017 performance, please click here and here.

USANA

USANA reached another record high sales in 2017: $1.047 billion. In fact, it succeeded in increasing its revenue each and every year during the last decade. In seven of the last 10 years, company’s growth was double-digit:

For the fourth quarter of 2017, the revenue was $273 million compared with $253 million in the prior-year period, representing an 8.0% increase. This was the highest quarterly sales in company’s history, as reported by the management. North Asia’s year-over-year quarterly growth was 25%, Greater China’s 14% and Southeast Asia-Pacific’s 4%. Sales in Americas-Europe region decreased by 5%.

During 2017, company had  announced its plans for a mid-2018 entry to four new European markets: Germany, Spain, Italy and Romania. It said products now have been available to preferred customers on a not-for-resale basis in these countries.

Currently, more than half of USANA’s volume is being generated in China where it has been dealing with a problem. It was announced in February 2017 that the company had been voluntarily conducting an internal investigation of its operations there, focused on compliance with the foreign corruption regulations. USANA says at this time it cannot predict the duration, scope, or result of the investigation.

For 2018, the company expects its net sales to be between $1.11 and $1.16 billion, a growth of 6.0%-10.8%.

For more on USANA’s 2017 performance, please click here and here.

…..

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

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