Acquisitions, new products and a strong Chinese market benefit major direct sellers
By: Dave Rauf
Primerica reported an uptick in sales and profit during the second quarter of 2023, spurred by growth in its life insurance division and improved results in its senior health business.
The Georgia-based life insurance and financial services company reported profit of $144.5 million for the quarter, an increase of 13% compared to the period a year ago. Sales were also up 3% to about $688 million.
CEO Glenn Williams told analysts during a recent earnings call that second quarter results reflect continued and predictable growth in the company’s life insurance division.
During the quarter, Primerica issued 97,000 new term life policies, up 9% year over year.
“Growth in our sales force and the appeal of our life insurance products are creating sales momentum despite the continuing financial pressure on middle income households,” Williams said during the call.
A lucrative part of Primerica’s business—its Investment and Savings Product—reported sales of about $215 million in the period, down 4%. Results in this segment improved, Williams said, as equity market recovery positively impacted client asset values.
Despite economic uncertainty, Williams said clients remain focused on their long-term investment goals.
“However, new sales are still under pressure,” he said. “We believe the compounding impact of high inflation over the last few years has slowed middle-income families’ ability to invest for the future.”
Primerica’s senior health business also benefited during the quarter from the “absence of a negative tail revenue adjustment.” Last year, the segment experienced a $5.4 million negative tail adjustment during the second quarter.
- Profit: $144.5 million, up 13%
- Revenue: $688.4 million, up 3%
Recruiting and Licenses on the Rise
During the quarter, Primerica said it recruited 86,000 new representatives, a 23% increase compared to the second quarter of 2022. And the company said it had more than 12,600 new reps licensed during the quarter, a 10% improvement year over year. The company now has almost 138,000 reps licensed to sell life insurance and is projecting a 3% to 4% increase in its sales force for 2023.
“It’s all kind of fundamental organic growth that we’re seeing right now,” Williams said. “So we expect recruiting to continue to be strong.”
The Utah-based seller of skincare and nutritional products beat Wall Street earnings estimates during the second-quarter but lowered its full-year financial outlook because of economic pressures and soft sales in several key global markets.
For the quarter, Nu Skin posted sales of $500 million, a year-over-year decrease of 11%, as revenue declined in just about every global region the company sells its products. The lone exception: China, where sales increased by 8% on a constant-currency basis.
But CEO Ryan Napierski told analysts during a recent earnings call that the company’s growth in China during the quarter was offset by weaker-than-expected sales in other markets. Additionally, recent product launches in the Americas and South Korea performed below expectations.
In all, a variety of macroeconomic headwinds, Napierski said, are hurting customer sentiment and spending. And aggressive price increases Nu Skin implemented over the past several quarters in markets around the world “has led to sluggish sales channel performance, most notably in developing markets, including Southeast Asia Pacific, Europe and Africa and Latin America,” he said.
“While we remain confident in the direction and future outcome of our strategy, the persistence of macro headwinds has made the journey more challenging than expected, especially over the past several quarters,” Napierski added. “Nevertheless, we remain committed to our strategic direction.”
The company reported second-quarter profit of $26.9 million, down 21% compared to the same period a year ago.
However, Nu Skin officials are encouraged about the second half of 2023. Napierski said there are positive signs—growth of paid affiliates and sales leaders during the second quarter—that point toward “sustained second-half growth.”
Nu Skin said it expects revenue in the range of $500 million to $540 million for the third quarter.
The company expects full-year revenue to range from $2 billion to $2.08 billion. Earlier this year, Nu Skin projected full-year revenue would be between $2.03 billion and $2.18 billion.
- Total Profit: $26.9 million, down 21%
- Total Sales: $500 million, down 11%
- Americas Sales: $107.6 million, 14%
- Europe and Africa Sales: $46.9 million, down 8%
- China Sales: $88.3 million, up 2%
- Southeast Asia/Pacific Sales: $63.7 million, down 32%
Smart Beauty Devices
Nu Skin is betting big on IoT-connected beauty devices. The company launched its first smart beauty device last year—LumiSpa iO—and is now ready to launch its second product in the connected-device segment: the WellSpa iO.
Napierski told analysts the new device system is scheduled to launch in several markets during the third quarter of this year and is expected to roll out in nearly all markets by the end of 2023.
The smart device segment is a key part of Nu Skin’s product personalization strategy, offering customized treatment options, intelligent coaching, and skincare routine tracking. The devices are intended to be coupled with the company’s consumer-facing app that offers product personalization, providing Nu Skin with valuable customer data about product usage.
“With the introduction of this next device, we expect to make steady progress towards our annual goal of 15 percent of revenue coming from connected device systems on our way to the longer-term target of 30 percent of revenue by 2025,” Napierski said.
During the second quarter, Nu Skin also completed its acquisition of BeautyBio, a beauty device brand with an omni-channel marketing strategy.
Through the acquisition, Nu Skin obtained BeautyBio’s patents for products focusing on hydration facial and micro-needling technology—both fast-growing segments in the beauty device market that Nu Skin plans to leverage.
BeautyBio will continue to operate independently as its own company, Napierski said, but Nu Skin “will look at their IP and we’ll look at opportunities to incorporate some of that technology into our Nu Skin business.”
Herbalife’s profit declined by 30% during the second quarter as a sales slump continued in the company’s two biggest markets: North America and China.
The direct selling giant reported net sales totaled $1.6 billion during the quarter, down almost 6%. That included a roughly 12% decline in North America to $303.6 million and 15% decrease in China to $88 million.
Net income for the second quarter was $59.9 million, down from $86.5 million during the same period a year ago.
CEO Michael Johnson told analysts during a recent earnings call that the company’s performance improved compared to the first quarter of this year, and that it marked a second consecutive quarter of improved sales.
“We are building strong momentum and our trends are improving,” he said. “I can confidently say we’re making steady progress.”
Company officials cited a 10% price increase put in place last year across most global markets for helping bolster sales figures.
Revenue in the company’s Europe/Middle East and Latin America regions was flat during the period, while Asia Pacific was down nearly 6% for the quarter.
In North America, a key market for the company, Johnson said Herbalife remains “laser-focused” on creating new engagement with customers and distributors through the launch of several new initiatives, some of which will be focused on “healthy active lifestyle activities.”
Herbalife did not release a revenue forecast, but company officials reiterated that they expect to see growth in the fourth quarter of this year based on trends in the market.
- Total Profit: $60 million, down 30%
- Total Sales: $1.3 billion, down 6%
- North America Sales: $303.6 million, down 11.6%
- Europe and the Middle East Sales: $289 million, FLAT
- Latin America Sales: $207 million, FLAT
- Asia Pacific Sales: $425.8 million, down 5.5%
- China Sales: $88 million, down 15%
Vegan Product Launch
Earlier this month, Herbalife launched its first vegan line of supplements for the U.S. market, Herbalife V.
During the call with analysts, Johnson said the line contains five plant-based products, including protein shakes, a greens booster, and a digestive support and immune support product.
“I can attest, they all taste great,” Johnson said.
Herbalife executives said they are hoping the plant-based product line will open the door to a new group of customers and distributors, while also providing an opportunity for existing distributors to expand their business.
The company already has a vegan line of products in Europe and in parts of the Middle East, Johnson said. He added: “We’ve got an incredible product line here that we’re just super proud of.”
New Chief Strategy Officer
During the earnings call with analysts, Herbalife also introduced Stephan Gratziani as its new chief strategy officer.
Gratziani spent 32 years as an independent distributor, selling the company’s products across global markets. He was one of Herbalife’s top three independent contractors in the world last year.
One of his primary roles will be to create new synergy between the company and its distributors. Johnson called the move a “game-changer” for Herbalife.
“He brings a new voice inside the company, the voice of the distributor with valuable field experience,” Johnson said. “In the ever-changing landscape of our business, we want the distributor voice to be even more integral as a part of our company.”
USANA Health Sciences reported profit of $17.3 million for the second quarter, and stronger-than-expected sales in China that helped the company beat expectations for the period.
Overall, the company’s profit for the quarter was down 9%. USANA said sales totaled $238 million during the period, down 10%.
CEO Jim Brown said USANA saw its active customer counts stabilize during the three-month period, while the company continued to make progress on several long-term strategic initiatives.
He said second-quarter operating results exceeded expectations.
“Although we remain in a fluid operating environment that is being influenced by inflationary pressures, we are generally pleased with the net sales and active customer counts and recognize that there is far more work to do to generate growth,” Brown told analysts during a recent earnings call.
The biggest bright spot for USANA during the period came from Mainland China, where sequential improvements in sales were driven by strong demand from a small market-specific promotion offered during the second quarter.
Brown said China is still in the process of reopening following COVID-19, and the company expects to see continued improvements in the market, though he cautioned that consumers are still feeling the pinch from inflation.
“We are pleased with our performance in this market, particularly given the macroeconomic environment. The country continues to reopen, allowing us to hold more in-person meetings and re-engage with our customers in our single largest market,” he said. “We are, however, continuing to see an impact on consumer spending from broader inflationary pressures, which are affecting customer purchasing decisions.”
USANA also updated its guidance for 2023 to $900 million to $950 million, up from a previous forecast of $875 million to $950 million.
- Total Profit: $17.3 million, down 9%
- Total Sales: $238 million, down 10%
- Asia Pacific Sales: $193.6 million, down 11%
- China Sales: $128.7 million, down 8.5%
- Americas and Europe Sales: $238.2 million, down 10%
New Global Market
USANA plans to open up shop in India in late 2023. It will become the company’s 25th global market.
During the call with analysts, Brown said the new market expansion is several years in the making.
“India is an exciting and compelling market opportunity,” he said. “I would like to stress that our approach to expanding and growing this market will be intentional and will focus on long-term sustainable growth.”