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.

Before going into the details of individual companies, few observations on the above table:

 * Over the last five-year period, Natura (42%), Herbalife (30%), and Nu Skin (27%) succeded to grow. Tupperware (-14%), Oriflame (-16%) and Avon (-38%) had declining sales.

* Avon reported negative growth in each of the last five years. Nu Skin’s and Tupperware’s sales have been decreasing in the last three years.

* Oriflame announced a revenue increase in 2016 for the first time in five years.

AVON

Avon’s last quarter revenue decreased by 2% to $1.6 billion, and 2016 revenue by 7% to $5.7 billion. This result marked the 21st straight quarter of revenue declines.

For the year-end result, all of Avon’s regions contributed to this global 7% decline: Asia-Pacific -11%, North Latin America -8%, South Latin America -7%, and EMEA -4%.

On the markets level, while Brazil was a shining star with a 27% sales increase in the last quarter, UK (-20%) and Mexico (-14%) were major disappointments.

CEO Sheri McCoy said, “Let me begin by saying that I am disappointed with our fourth order results… It is clear that we have more work to do on our multi-year transformation journey to improve consistency of performance, particularly in a handful of markets. For the quarter, both our constant currency revenue and our active representative growth came in below expectations.”

In fact, Avon’s active representitives in the last quarter of 2016 was down 2% as compared to the same quarter of 2015. And the major loss came from its Asia Pacific region (-9%).  The management highlighted the Active Rep declines in Malaysia, Colombia, Turkey and Italy.

As the company moves into 2017, the five key areas of focus and investment were listed during the Earnings Call as:

* Strengthening the Avon brand
* Introducing innovative products
* Pricing discipline
* Improving representative engagement
* Evolving the service model

Management also said  they would work to improve the top 15 markets through more resources and focus which represent approximately 80% of Avon’s revenue.

For more on Avon’s 2016 performance please click here and here.

HERBALIFE

Herbalife closed the last quarter of 2016 with $1.045 billion sales. This was 5% less than the previous year’s last quarter. And for the whole year of 2016, Herbalife’s revenue performance was slightly better than 2015 (+0.3%).

On the regional level, China reported the worst quarterly sales (-12%). The others’ were not so bright, as well: South & Central America -11%, Mexico -8%, Asia Pacific -3%, North America -1. The only positive figure was from EMEA (+2%).

Herbalife management also announced an agreement in principle to form a joint venture with Tasly Holding Group, a leading health products and services company based in China. The joint venture will develop and commercialize high-quality consumer health products based on Tasly’s deep portfolio of proprietary formulations, patents, know-hows, and clinical studies.

CEO Michael O. Johnson said, “I’m happy to say that we accomplished a lot in 2016 and I feel we are laying important ground work for the next 10 years at Herbalife Nutrition. That said, there are some key markets where we have work to do.” In a few months’ time in June, current COO Richard Goudis will take over as CEO of Herbalife. Michael O. Johnson will be company’s Executive Chairman.

During the Earnings Call following the 4Q report, COO Richard Goudis explained how they would comply with the FTC-imposed regulations. According to this, the rewards in the U.S. will be based on the final sales to end consumers as opposed to the initial sale from the company to a distributor. This will start in May. If the total of these sales meets or exceeds 80% of the total U.S. retail sales, then Herbalife will be able to pay out additional compensation on these sales. If such sales are below 80% of the U.S. retail sales, then the payout on documented sales will be capped at 10% above the total documented sales value. Richard Goudis added that this 80% was not a compliance requirement, but a threshold that if passed would allow Herbalife to pay out higher rewards for retail sales.

For 2017, Herbalife expects 0.3 to 3.3% net sales increase.

For more on Herbalife’s 2016 performance please click here and here.

NATURA

Natura closed the year with almost the same sales figure as last year’s. There was only a 0.2% growth. The company realized 68% of its annual revenue in its home country, Brazil. Of the six public companies reviewed here, Natura had the highest sales growth in the last five-year period (41%). Natura is also the only one that managed to grow in each of the five year, although its 2016 figure was the worst of the five.

The management announced “Rede Natura”, Natura’s online business unit had doubled its sales compared to 2015, ending the year with R$ 106.7 million and registering 93,000 Digital Natura Consultants and 1.5 million consumers.

Natura’s retail strategy also progressed during 2016 by launching five exclusive stores in shopping centers in the city of Sao Paulo. Natura said all of them have performed better than expected.

However, these developments do not mean Natura’s leaving the direct selling channel aside. The company’s focus in 2017 will be to “revitalize direct selling”. Natura is launching a new value proposition for the consultants to further develop them professionally, and modernize the way they work and increase their income.

During the last quarter of 2016, Natura Board announced that CEO Roberto Lima had resigned, after being for two years in the office. The new CEO would be Joao Paulo Ferreira. Ferreria has been with Natura since 2009 and his last position was the Vice President.

For more on Natura’s 2016 performance please click here and here.

Next week, we will look into Nu Skin, Oriflame, Tupperware and Amway’s figures.

…..

Hakki Ozmorali is the Principal of WDS Consultancy, a consulting firm specialized in providing services to direct selling firms. He is also the publisher of The World of Direct Selling, global industry’s leading weekly online publication. He is an experienced professional with a strong background in direct sales. Hakki was the first corporate professional in the Turkish network marketing industry. His work experiences in direct selling include Country Manager roles at Oriflame, Herbalife and LR Health & Beauty Systems, and Regional Director, North America role at Lifestyles Global Networks.






 
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The post 2016 Growth Performances of Companies – 1 appeared first on The World of Direct Selling.

The below table shows us that four companies have been doing better than last year. Avon and Tupperware on the other hand, generated less sales in Dollar terms as compared to 2015.

AVON

Avon’s sales in the third quarter was $1.4 billion, representing a 2% decline on year-over-year basis. Active representatives were relatively unchanged, and average order increased 4%

Among Avon’s four operational regions, only South Latin America reported a sales growth (2%). The other three regions’ performances were not so good: Asia-Pacific -9%, North Latin America -6%, and  Europe, Middle East & Africa -4%. South Latin America’s positive result is important for Avon as this is company’s largest geographical region, accounting for more than 40% of its global revenue. Within this region, Brazil achieved a 14% sales increase in the third quarter.

Having been disappointed with the performances of the Asia Pacific region, Avon placed it under the management of John Higson, who had been leading other geographic segments. Asia Pacific is currently Avon’s smallest segment but the management says it believes it has “strong potential over time”.

Commenting on the third quarter results, CEO Sheri McCoy said, “I’m pleased with Avon’s third quarter results, as they were generally consistent with our expectations. Similar to last quarter, our performance improvements were broad-based, with 8 of our top 10 markets growing in local currency, with particularly strong performance from Brazil and Mexico.”

With these results, Avon’s nine-month sales figure is 9% below last year’s.

As we all know by now, Avon is in the process of moving its global headquarters from New York to London, U.K. It has been announced that a small corporate office was opened in West London. Also, the relocation of U.S.-based Avon employees from the Manhattan building to Rye and Suffern, New York was completed.

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

HERBALIFE

Herbalife’s third quarter revenue of $1.1 billion was 2% higher than last year’s same period. EMEA contributed to this performance with a 11% growth, and North America with 10%. The worst performance came from South and Central America: -12%. Herbalife’s new members in the U.S. grew 7% in this last quarter versus last year. The management said this was extremely positive being a testament to the dedication of the distributors in the U.S. and their confidence in their ability to thrive under the FTC settlement announced in July.

Herbalife’s revenue performance after nine months is also +2% on a year-over-year basis.

Herbalife CEO Michael Johnson was satisfied with his company’s results:  “Quarter three was another strong quarter… Reported net sales grew 2% to $1.1 billion, it’s our third consecutive quarter of positive year-on-year reported net sales growth despite the challenging currency environment.”

An important news that was released from the Herbalife headquarters following the third quarter was about the CEO transition. Herbalife’s iconic CEO Johnson was leaving his post after 13 years, to Richard P. Goudis, company’s current Chief Operating Officer, effective June 2017. Michael Johnson would continue serving as the Executive Chairman. The management said they had been planning this process of transition over the past several years and had outlined a seamless transition plan.

For the whole year of 2016, Herbalife expects a sales increase between 1 to 2% as compared to 2015.

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

NATURA

Natura reported 5% sales decline in the last quarter. Natura owes the majority of its revenue to Brazil and the contraction here was even worse: -7% Despite this, Natura’s performance in the first three quarters combined, is still slightly better than 2015: +1%.

The management attributed the situation in Brazil to consumers’ intensified search for products with lower prices, especially in fragrances, body and face care, which are more sensitive to disposable income and account for about 60% of Natura’s revenue.

With the poor performance in its core market Brazil, and with the better results in its other markets at the same time, the share of Brazil market has been continuously diminishing. The shares are now: Brazil 72%, other markets 28%.

As of end-Q3, Natura had 1.8 million consultants on the field. 1.3 million of them were in Brazil and 500,000 in its international markets.

With regard to the development of new channels, company said its SOU line is already in 1,334 stores in the drugstore with positive results. Natura intends to expand its presence through this channel in 2017 as well. There are also four Natura-owned stores now again, with promising results. Natura Network, the online channel, continues to post double-digit sales growth and has currently 82,000 digital franchisees (was 54,000 in 3Q15).

In October 2016, Natura appointed a new CEO, Joao Paulo Ferreira. Ferreria has been with Natura since 2009 and his last position was the Vice President.

We have published an extensive review of Natura very recently. You might want to take a look here.

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

NU SKIN

Nu Skin’s third quarter global sales was $604 million, a 6% improvement over last year’s same period. Nu Skin’s North Asia region contributed with 24% growth, China with 15%, EMEA 5%, and Americas 1%. The only region that posted negative performance was  South Asia/Pacific (-35%). As more than 70% of Nu Skin’s revenue is being generated in North Asia and China, the results from these two regions obviously had a strong positive impact.

Nu Skin’s nine-month performance on the other hand, is no better than last year’s. 

“We are pleased that we exceeded guidance and posted year-over-year growth during the quarter,” commented Truman Hunt, company CEO.

During the investors’ call, Truman Hunt said they launched an air purifier in China, designed specifically for this market. The product is about $1,000 and the company expects to generate $15 million in sales in the last quarter in China from this product.

Nu Skin expects to close the year with $2.23 to $2.25 billion revenue, which is almost the same as its 2015 figure.

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

ORIFLAME

Following the 3% revenue increase in the second quarter, Oriflame reported another 6% growth. Company’s third quarter sales was €279 million (approx. USD 260 million). Growth on the field was not that good, though. The number of its active consultants decreased by 5% to 2.6m.

Sales growth in this quarter came from Asia & Turkey (26%) and Latin America (16%) regions. Europe & Africa contracted by 1% and CIS (Armenia, Azerbaijan, Belarus, Georgia, Kazakhstan, Kyrgyzstan, Moldova, Mongolia, Russia, Ukraine) region by 13%.

CEO Magnus Brannstrom commented, “We are pleased to report yet another quarter of Euro and local currency growth with healthy improvements in profitability. The strong performance in Asia & Turkey and Latin America continued, while in the CIS the focus remains on returning to sustainable growth and improving margins.”

As of end-Q3 2016, Oriflame’s year-over-year revenue performance has been 2.5% above last year’s. However, the most recent news coming from the field was not good for Oriflame. Sales increase has considerably slowed down in Q4. It has so far been 7% in local currency, about half of what has been since the beginning of the year. This led to a fall in Oriflame’s shares by 15%, the biggest drop ever.

During the quarter, Oriflame entered a long term partnership with IBM to outsource its IT and financial operational services. Oriflame management expects this partnership to bring new levels of customer focus, productivity and automation to company’s technology and internal processes, covering the entire Oriflame group. The full implementation is planned to happen by the end of 2017 and is expected to provide Oriflame with annual savings of approximately €3 million.

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

TUPPERWARE

Tupperware reported $522 million sales last quarter which was the same quarterly figure of 2015 ($521 million). Tupperware’s nine-month sales performance is 5% worse than last year’s.

On the segment side, South America region reported 30% growth last quarter; Brazil shines with a 52% sales increase there. There was also a 30% increase in active sellers in Brazil. Tupperware North America posted 4% growth. The U.S. and Canada had 6% growth, whereas sales in Mexico was down 2%. The negative impacts came from Beauty North America (-19%), Europe (-10%) and Asia-Pacific (-1%) units.

Although not a very big business segment (has about 10% share), “Beauty North America” is still a headache to Tupperware. BeautiControl sales was down 24% and Fuller Mexico was down 18%.

CEO Rick Goings said during the investors’ call, “I don’t feel good about what we are seeing in BeautiControl. This just continues to be such a drag on our business. With lower productivity, the strategy has been to focus on skin care, which is the right thing to do, because consumers are more dedicated to their skin care brand than they are to cosmetics, particularly color. But it can hurt short-term productivity, and that’s what really caused it… In the third quarter, we named Rick Heath who really knows the business as Managing Director of BeautiControl… He’s been at BeautiControl before we sent him off on assignments around the world. So he has the credibility with the sales organization and to engage our career leaders.”

For the whole year of 2016, Tupperware expects 1% growth in global sales over 2015.

Segment expectations for this year are: South America up 16-17%, Tupperware North America up 2%, Asia-Pacific down 1%, Europe down 8%, and Beauty North America down 20%.

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

….

Like I said in the beginning, we have less than two months to go. Let’s see how these giants will close the year.

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

Having received the second quarter reports, we now have the opportunity to review companies’ growth figures as of mid-2016. This brief analysis will focus on world’s five largest public direct selling companies, Avon, Herbalife, Natura, Nu Skin, and Tupperware, in alphabetical order.

AVON

Avon’s second quarter sales declined 8% to $1.4 billion. Company’s first six months sales growth was -13%.

Once again, sales decline occurred in all regions of Avon: South Latin America -12%, Asia Pacific -10%, North Latin America -5%, and Europe, Middle East & Africa -2%.

When commenting on the results, CEO Sheri McCoy said, “Our second quarter results came in slightly above our expectations, driven by operating performance that was better than anticipated. We also saw some modest easing in foreign currency pressure. Importantly, our performance improvements were broad-base with nine of our top 10 markets”. McCoy added during the earnings call that they had delivered good growth in constant currency in EMEA, South Latin America and North Latin America.

Management announced that the transition of the corporate headquarters from New York to the UK remained on track. The new headquarters in the UK is planned to be operational by the first quarter of 2017. As a part of this plan, Sheri McCoy will relocate her office to the UK.

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

HERBALIFE

Herbalife reported 3% quarterly revenue increase achieving $1.2 billion. As shown on the table, North America and EMEA made signficant contributions in the second quarter. Q1 and Q2 combined, Herbalife’s sales is over $2.3 billion, representing a 2% growth over prior year.

The management said they sold more products in the second quarter than any quarter in Herbalife history. Approximately 80% of Herbalife’s markets reported an increase in volume points. Herbalife also announced a 3% increase in its active sales leaders.

CEO Michael O. Johnson said, “This is a fantastic and historic quarter for Herbalife. Our momentum and performance reflects the strength of our distributors’ businesses. And with the regulatory settlement behind us, we’ve never ever been more focused,”.

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

NATURA

Brazil’s cosmetics giant Natura achieved a sales increase of 5% in the last quarter and 4% in the first six months of the year, over the same periods of 2015. The management was happy to announce that in Brazil, despite the still-challenging scenario, company’s revenue advanced 1.2% from 2Q of 2015, reversing the negative trend observed in the last six quarters.

For a while, Natura has been working on positioning itself as an “omni-channel company”, as opposed to being only in the direct sales business. Within this context, its SOU line in the drugstore channel is present in over 1,200 stores. Natura opened its first owned store in April 2016 in Sao Paulo City, and the second store is to be opened in August 2016. Rede Natura, Natura’s online channel posted double-digit revenue growth, and now has 70,000 “digital franchisees” (was 32,000 in 2Q, 2015) and 950,000 registered consumers.

Currently, Brazil accounts for 67.5% of Natura’s revenue, and all other units for 33.5%.

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

NU SKIN

Nu Skin reported 7% sales growth in the second quarter. The $600 million figure achieved was above company’s guidance. Despite this, the first half performance is still 3% below prior year same period’s.

The quarterly growth figures of Nu Skin’s five regions were as follows: South Asia/Pacific 36%, Greater China 18%, EMEA 6%, North Asia -4%, and Americas -19%.

China is the largest region of Nu Skin’s, with a 37% share. With its increasing importance, management announced they would be launching products specific to this market. As an example, this fall, Nu Skin will introduce an air filter for home use in Mainland China.

“We are pleased with our results this quarter and are raising our revenue guidance for the year to $2.20 to $2.24 billion,” said Ritch Wood, CFO. If this happens, Nu Skin will reach its 2015 revenue, but will still be far from its record figure in 2013 ($3.2 billion).

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

TUPPERWARE

Following a 10% decline in Dollar sales in the first quarter, Tupperware’s second quarter revenue was down 4% as well. With these, company’s sales in the first half of 2016 is 7% less than what it was in 2015 this time.

The highest sales decline came from Tupperware’s beauty unit in North America: -19%. This was followed by European region with -13%.

CEO Rick Goings said Tupperware U.S. and Canada reported 1% sales increase in the last quarter. He continued, saying, “This was the first full quarter of the new compensation plan change in the U.S. And as we said in April, this is really the reason behind this. It is to incent more career-oriented behaviors, and so it requires continued growth and recruiting from our sales leaders”.

Tupperware reported its total force had increased by 5% at the end of Q2, exceeding 3.1 million, but there was a 2% decrease in its active sales force. Here again, the biggest loss came from Beauty North America: -10.3%.

The region Tupperware was especially happy with in the second quarter was South America. Sales in this region was up 8%, with Brazil recording an impressive 22% growth.

For the whole year of 2016, Tupperware management expects to achieve a global sales decline between 1-2% as compared to 2015. Sales are expected to be down 8-9% in Europe, up 1-2% in Asia Pacific, even in Tupperware North America, down 16-17% in Beauty North America and up in South America by 14-15%.

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

….

Let’s see how the rest of the year will show us.

The post Giants’ Growth Performances at Mid-Year appeared first on The World of Direct Selling.

This week and the next one, we will take a look at six largest public direct sellers’ profitability performances. This two-part review will focus on last three years’ figures to be able to give a better comparative picture. The first part will cover Avon, Herbalife and Brazil’s cosmetics giant, Natura.

Avon
The numbers shown here for Avon do not include its North America business that was sold to Cerberus Capital at the end of 2015. And as Avon did not report its 2013 figures without this unit, we don’t have them in this review.

The table shows a decline in both of Avon’s operating and net income in 2015. Again, this was despite the fact that company’s worse-performing North America unit was excluded.

The graph to the right shows how big a headache  North America had been for Avon. You can see the sales in North America has fallen by more than half between the 2007-2014 period.

In operating profit terms, both in 2014 and 2015, Avon’s EMEA region was the most profitable of all three. Other regions are Asia-Pacific and Latin America.

While commenting on profits, CEO Sheri McCoy said, “Our operating margin continues to suffer, primarily due to FX… the FX pressure we faced over the course of the year was extreme… which had nearly a $0.5 billion impact on adjusted operating profit in 2015 alone.”

The company announced it expected the profit comparisons still to be weak in the first half of 2016 due mainly to the “significant” foreign currency deterioration.

As it has been very recently declared, Avon is now cutting 2,500 positions worldwide and is moving its headquarters from New York to London, UK. This move was a part of company’s Three-Year Transformation Plan. The investors have reacted quite positively to Avon management’s moves lately. Avon shares’ price has been in an upward trend since the beginning of 2016.

Herbalife
In company CEO Michael O. Johnson’s words,”2014 was a record year in terms of net sales, volume and sales leader retention.” However, the situation was not as bright on the profit side. Operating profit went down to 10% from 15%, and net income to 6% from 10% as compared to previous year. The main reasons to this decline in profits were the increases in company’s a) Selling, General and Administrative Expenses (by 6 points) and b)  Interest Expense (by 1 point).

Herbalife explains the increase in Selling, General and Administrative Expenses with “$103.4 million and $98.0 million pre-tax unfavorable impact related to the remeasurement of Venezuela Bolivar-denominated assets and liabilities at the SICAD I and SICAD II rate, respectively, and $7.0 million loss on Venezuela asset impairment.”

Herbalife managed to increase its profits in 2015, despite a 10% decline in net sales. Still, company’s profitability was worse than what it was in 2013.

At the end of 2014, the price of Herbalife shares was at $38. Shares closed the year of 2015 at $54 with over 40% gain in one year.

Natura
Natura’s profitability has been in a downward trend as it can be seen from the figures. This is an interesting situation as the company has been enjoying a healthy sales increase in the same period.

From 2013 to 2014, Natura increased both its operating expenses and interest expenses at a rate higher than its sales increase. We see the same trend from 2014 to 2015, too. As a result, profit is down both in absolute terms and as a percentage of sales.

One last important observation from Natura’s figures is on its sales composition. We know Brazil is still company’s major revenue-generator. However, the graph on the right shows the fact that growth has stopped and turned to negative in Brazil and growth is now coming from Natura’s international markets. International markets account for 29% of company revenue as of end-2015. This was 19% at the end of the previous year. This situation is important as Brazil market’s profitability is higher than international markets.

Next week, we will be covering another group of three giants that are publicly owned: Nu Skin, Oriflame and Tupperware.

The post Performances From a Profitability Perspective – 1 appeared first on The World of Direct Selling.

As we now have their last year’s Q4 reports, it is the time for us to take a brief look at how the giants did last year. The group we will cover consists of the six largest publicly-owned direct selling companies, plus the industry leader Amway. As you will see, these companies came with very interesting figures, to say the least.

Let’s take a look at how they have done lately. As a start, I would you to take a glance at the below table:

Few observations:

* Five of the six giants reported revenue decreases in 2015.
* Avon, Nu Skin and Tupperware posted double-digit declines last year.
* Avon, Oriflame and Tupperware has been in a downward trend in the last five years.

 Avon

Avon reported 20% decline in quarterly sales. Without the impact of foreign exchange rates Avon said, it would have increased by 3% in constant dollars. The number of units sold was down 2% as well. With this, Avon closed the year with net sales of $6.2 billion which represented 19% yearly decrease compared to 2014. Avon’s sales volume has shrunk by 30% in the last five years.

All three regions of Avon contributed to the revenue decline in Q4: Latin America (-26%), Asia Pacific (-16%), and EMEA (-13%). The drop in Latin America is important as this region accounts for about half of Avon’s revenue. Russia, South Africa and Turkey came with pleasing results from the EMEA region.

To remind, North America division is a “discontinued operation” and Avon’s figures no longer includes results from North America. Management announced anyways that they were pleased that the North American unit met the goal of being profitable for the whole year.

Beauty category accounted for 74% of Avon’s revenue in 2015. It was followed by fashion (15%) and home (11%). Beauty category is divided in itself as skin care (40%), fragrances (36%) and color (24%) in value.

“Our operating performance for the fourth quarter and fiscal year was in-line with our most recent outlook. Looking back at 2015, our key local markets drove steady improvement in overall performance. Importantly, we improved year-on-year Active Representative trends – with full-year growth of 1%,” said Sheri McCoy, CEO of Avon.

Last month, Avon announced a Transformation Plan, that included cost reductions to improve the cost structure and  to enable the company to reinvest in growth. Sheri McCoy said, “We are on track to close our partnership with Cerberus and fully engaged in executing our transformation plan.”

Avon introduced last year a new brand positioning called “Beauty for a Purpose” in all markets and it looks forward to building upon this in 2016.

Avon will begin to report against its new segments, starting from Q1 of 2016: Europe, Middle East and Africa, North Latin America, South America and Asia Pacific.

For more on Avon’s 2015 performance please click here and here.

Herbalife

Herbalife’s fourth quarter net sales was $1.1 billion, representing a decline of 3.1% compared to the prior year period. Its yearly sales figure was down 9.9%, too.

Without the negative impact of foreign exchange fluctuations, company’s total volume points grew 5% compared to the fourth quarter of 2014. This, as the management said, had significantly exceeded high-end of their guidance which was 1.5% growth.

Five of Herbalife’s six regions contributed to revenue decline: South and Central America (-31%), Asia-Pacific (-17%), Mexico (-14.5%), EMEA (-10.4 %), and North America (-5%). China reported 27% sales increase.

With regard to the FTC investigation, CEO Michael O. Johnson said, “The company is currently in discussions with the FTC regarding a potential resolution of these matters. Possible range of outcomes… could include monetary penalties and other relief, or the closure of these matters without action… And at the present time, the company is unable to estimate a range of potential loss, if any, relating to these matters. We cannot comment on the scope, duration or the outcome of the investigation at this time. We will provide updates when appropriate to do so.”

For 2016, Herbalife expects its net revenue to be between -0.5% and 2.5% as compared to 2015.

For more on Herbalife’s 2015 performance please click here and here.

Natura

Natura said it had conducted a comprehensive strategic review in the light of structural aspects of our market and business in 2015. Based on the findings, it defined actions focused on revitalizing the direct selling channel by:

* Streamlining the portfolio

* Concentrating investments in priority brands and projects

* Reviewing the brand position and strategy

2015 was marked by a sharp contrast between Natura’s Brazil and International Operations. In Brazil, the deterioration in the economic environment, the higher tax burden and the weaker local currency contributed to lower sales. While sales at home declined 7% on a yearly basis, the growth in the international markets was 62%.

Natura’s international markets account for 29% of revenue as of end-2015. This was 19% at the end of the previous year.

As an important step, Natura prepares to open its first retail stores in Brazil in 2016.

For more on Natura’s 2015 performance please click here.

Nu Skin

Nu Skin’s quarterly sales growth was -6% and yearly was -13%. Management said “fourth quarter results finished a bit softer than expected” and blamed the lower-than-expected LTO (Limited Time Offer) sales in Korea. Nu Skin also reported 18% decrease in its active field force on a year-over-year basis.

Company’s 2015 revenue was $2.2 billion, representing a total of 30% decline in the last two years. Nu Skin’s sales had peaked in 2013 with $3.2 billion.

All five regions of Nu Skin’s posted negative growths last quarter. The worst result came from EMEA with -20%. But as this region accounts for only 6% of company revenue, its negative impact would not be felt should the other regions had performed better.

As of year-end, China remains as Nu Skin’s top region with a 34% share in its global sales. North Asia generates 31%, Americas 15%, and South Asia-Pacific 14%.

Nu Skin announced it had planned primary product launches for the second and fourth quarters of 2016 and said growth in sales leaders and consumers would be critical to success.

Management expects a local-currency growth in the 2% range for 2016 and a 7% negative impact from the strengthening Dollar. So, the revenue forecast for 2016 is $2.10-2.15 billion

For more on Nu Skin’s 2015 performance please click here and here.

Orifame

Oriflame reported 4% decline in both its quarterly and yearly sales. Oriflame’s number of active consultants was down 7%, too. 2015 was Oriflame’s fifth consecutive year of negative growth.

CIS region (Armenia, Azerbaijan, Belarus, Georgia, Kazakhstan, Kyrgyzstan, Moldova, Mongolia, Russia, Ukraine) continued to be a headache for the company. Sales in this region decreased another 30% in the last quarter. Europe was flat, Latin America up 10%, Turkey, Africa and Asia up 28%. With the downward trend, CIS region’s contribution to Oriflame’s global volume went down to 32% at the end of 2015, from 43% in 2014. The number of active consultants in this region decreased by 21% on a year-over-year basis.

Skin care category generated 25% of Oriflame’s sales in 2015. Color cosmetics accounted for 23%, and fragrances 19%. Although growing, wellness category is still a small category of the company, producing 7% of its revenue.

Commenting on the recent re-organization, CEO Magnus Brannstrom said, “During the end of the fourth quarter we took another step towards becoming an even more agile company when we presented a new organisational set-up to further strengthen our position in a more digital world.”

For more on Oriflame’s 2015 performance please click here.

Tupperware

Tupperware’s quarterly revenue decreased by 13%. The most significant contributions to the fourth quarter growth came from Argentina, Brazil, China, and Mexico. In addition to these, Tupperware U.S. and Canada posted a 10% increase last quarter and that came from a 12% larger sales force.

With this quarterly performance, Tupperware closed the year with a sales figure that was 14% less than previous year’s. On the field on the other hand, total sales force was up 5% versus prior year at the end of the quarter, and there were 2% more active sellers in the quarter, the third consecutive quarter with a year-over-year active seller increase.

On a business unit basis, 2015 revenue performances were: Tupperware North America +1%, Asia Pacific -8%, Europe -17%, Beauty North America -17%, and South America -20%.

Not happy with the results, CEO Rick Goings said, “We had a disappointing quarter as we lapped a tough comparison and continued to see an impact from economic and political headwinds in many of our units. While I don’t want to take away from the strong performances in a number of units, our internal actions did not overcome the impact of worse than expected externals in some of our units.” Goings continued, “Given today’s environment, we’re making some defensive moves to allow us to perform financially and to play better offense in implementing our growth strategies.”

Tupperware management’s revenue growth expectation for 2016 is between -4% and -6%.

For more on Tupperware’s 2015 performance please click here and here.

Amway

Since the beginning, this quarterly review has been focusing on the six largest public companies, for two reasons: First, to give an overall picture without boring the readers with so many companies’ figures; second, we only have access to public companies’ reports in detail.

As Amway has been reporting its yearly results regularly in the last few years, we have been adding this giant’s figures to the year-end reviews, too.

According to the announcement, Amway’s global sales last year was $9.5 billion. While this meant 12% year-over-year decline, Amway is still holds leadership position in the industry.

Amway reported its top 10 markets in 2015 as China, South Korea, United States, Japan, Thailand, Russia, Taiwan, Malaysia, India and Ukraine. China alone represents about one-third of Amway’s sales. Amway announced it had experienced growth in seven of these top 10 markets..

For more on Amway’s 2015 performance please click here.

……..

We are getting closer to the end of the first quarter. In about two months’ time, we will be looking at these companies’ quarterly reports.

The post A Review of Last Year Performances appeared first on The World of Direct Selling.