A turbulent Q1 2024 sees major direct sellers grappling with diverse global challenges.
By Dave Rauf
Herbalife
Herbalife’s continued efforts to restructure and transform the company negatively impacted its profitability in the first quarter of 2024.
The MLM giant reported first-quarter profit was down 17%.
Herbalife announced its restructuring initiative in March, saying it “intends to implement actions throughout 2024 to streamline its employee structure” in an attempt to enhance leadership and productivity.
And when the company reported earnings it added a restructuring goal to “bring leadership closer to its markets and accelerate productivity.”
The reorganization incurred $60 million of pre-tax expenses, primarily related to severance costs. Herbalife expects a “majority of all actions related to this program to be completed by the end of June this year.”
“The work we have been undertaking during the reorganization has been aimed at designing the most efficient and optimized organization for top-line growth and financial performance efficiency,” CEO Michael Johnson said during a recent earnings call.
Herbalife has not said how many jobs it expects to eliminate in the restructuring program.
But the company projects its restructuring program will create $40 million in annual cost savings in 2024 and $80 million in annual cost savings by the beginning of next year.
Meanwhile, first-quarter sales results were generally mixed across the company’s major markets.
Sales in the quarter were flat at $1.3 billion. That includes a roughly 11% decline in North America.
But Asia Pacific, the company’s largest market, was up 4%. And China, a major market that has proven difficult for Herbalife in recent years, was up 11% to $75 million, the second consecutive quarter of double-digit growth.
Herbalife says it is forecasting 2024 total sales in the range of flat to up to a 5% increase year over year.
Q1 Numbers
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Total Sales:
$1.3 billion, flat
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Profit:
$24.3 million, down 17%
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North America Sales:
$265.8 million, down 11%
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Europe and the Middle East Sales:
$277 million, up 4%
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Latin America Sales:
$214 million, up 2%
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Asia Pacific Sales:
$431 million, up 4%
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China Sales:
$75 million, up 11%
Distributor Growth
During the earnings call with analysts, Herbalife executives lauded recent successful efforts to boost new distributor numbers.
The company said that for the first time since April 2020 it saw year-over-year growth in all of its global regions in terms of new distributors. Herbalife said the new distributor count is up 22% globally.
That uptick, executives said, was due to a program aimed at driving increased sales and recruitment globally.
USANA
An uptick in USANA’s China business helped counter underperforming sales in most of the company’s other global regions, as profit tumbled during the first quarter.
USANA reported $228 million in sales, down 8% year-over-year, and $16.5 million in profit, a decline of 10% during the quarter.
CEO Jim Brown told analysts during a recent earnings call that sales were “softer” than expected outside of mainland China and failed to meet internal expectations.
Sales in the Americas and Europe declined by 12% to $43 million. In its Asia Pacific market, sales dipped 7% year over year.
The lone bright spot: China, where sales improved by 3% compared to the quarter a year ago, and the company’s active customer count increased by 15%.
Brown called the company’s performance in China “strong,” and partially the product of a sales promotion designed to reward its distributors.
To counter weak sales, Brown said USANA is planning to offer market-specific incentives throughout 2024 to “help stimulate sales and customer growth.”
USANA expects full-year earnings revenue in the range of $850 million to $920 million.
Q1 Numbers
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Total Sales:
$228 million, down 8%
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Profit:
$16.5 million, down 10%
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Asia Pacific Sales:
$285 million, down 7%
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China Sales:
$128 million, up 3%
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Americas and Europe Sales:
$43 million, down 12%
India Market Fully Operational
USANA also noted that the first quarter was the first full quarter of operation in India.
The company announced its plans to expand into India last year, increasing its global footprint to 25 markets. The launch followed several years of research to prepare for expansion into the country.
Nature’s Sunshine
The nutritional and personal-care products maker reported profit of $2.3 million during the first quarter, and is expecting sales to continue improving throughout the year.
First-quarter sales totaled $111 million, up 2%. The small increase was driven by improved sales in North America and Europe, which were up year over year at 5% and 4%, respectively.
Sales were $108 million for the quarter, down 2%. The decline was largely driven by sales drop-offs in China and North America. Digital sales also increased in the quarter by 33%, while Nature’s Sunshine said customer growth jumped by 34%.
Moving forward, inflation and unfavorable foreign currency exchange rates are expected to continue impacting gross margins, despite the company’s improvement initiatives.
In Asia, the company’s largest market, sales were flat in the first quarter, and foreign exchange rates created a $2.5 million headwind.
Sales in China declined 13% due to what CEO Terrence Moorehead described as a “weak economic environment,” impacting overall performance in the Asia Pacific region.
Nature’s Sunshine is forecasting growth between 3% and 9% for the year.
Q1 Numbers
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Total Sales:
$111 million, up 2%
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Profit:
$2.3 million
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Asia Sales:
$46.2 million, flat
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Europe Sales:
$22.2 million, up 4%
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North America Sales:
$36.5 million, up 5%
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Latin America Sales:
$5.9 million, down 4%
Nu Skin
Nu Skin reported a loss of $533,000 in the first quarter, as the company navigates the challenges of a business transformation.
The Utah-based seller of skincare and nutritional products reported double-digit sales declines in all of its major global regions, but said first-quarter results were in line with expectations and maintained its full-year financial outlook.
CEO Ryan Napierski said customers in Europe and Africa responded well during the quarter to the company’s line of weight-management products, and there were several positive trends in a handful of markets in the company’s Southeast Asia region.
Nu Skin is in the midst of a sprawling transformation announced in 2023 intended to allow the company to accelerate growth as the MLM business continues to adapt to changes in the business due to technology and social media.
Called “Nu Vision 2025,” the company has launched a series of IoT-connected beauty devices and has said its smart beauty device segment is expected to be a key part of Nu Skin’s product personalization strategy. As part of its transformation, Nu Skin has also beefed up its digital efforts, enhancing its e-commerce platform and launching new apps for customers and affiliates.
Nu Skin expects full-year revenue in the range of $1.73 billion to $1.87 billion.
The Numbers
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Loss:
$533,000
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Total Sales:
$417 million, down 13%
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Americas Sales:
$75 million, down 26%
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Europe and Africa Sales:
$42.2 million, down 11%
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China Sales:
$61 million, down 10%
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Southeast Asia/Pacific Sales:
$60 million, down 11%
Nu Skin’s Next International Market
Nu Skin is planning to launch in India, a territory that Napierski referred to on the earnings call with analysts as “one of the fastest-growing direct selling markets in the world.”
Napierski said he expects Nu Skin to officially enter the India market in 2025 with a “digital-first approach that is more agile and will enable us to scale more quickly throughout the market.”
Dave Rauf is a Social Selling News Contributor