Herbalife, Tupperware, Primerica come back to earth after 2020 surge; Nature’s Sunshine remains strong
Herbalife’s sales softened during the third quarter, following a blockbuster period a year ago. The company endured a double-digit revenue dip, while sales declined in several geographic regions.
Still, CEO John Agwunobi said the direct selling giant remains on track to end 2021 with another record sales year.
Herbalife reported total net sales for the third quarter totaled $1.4 billion, down 6 percent compared to a year ago when the seller of supplements and weight-loss products recorded what was then a best-ever three-month period for sales.
North American sales dropped 11 percent to about $355 million for the quarter, while China sales plunged 30 percent to $154 million. South and Central American revenue also declined, down 13 percent compared to the prior year.
Meanwhile, sales in three of Herbalife’s top five individual global markets—India, Mexico and Vietnam—were all up on a year-over-year net sales basis.
CEO Agwunobi told analysts to take third-quarter sales figures with a grain of salt since the results, and those coming next quarter, will be compared against sales records set during both periods in 2020.
When compared to the same period during 2019, the most recent third-quarter revenue figures for the U.S. market are 38 percent higher.
“We remain on track for another record sales year,” Agwunobi said during an earnings call. “The fundamental tailwinds driving the global nutrition industry, along with demand for our science-based nutrition products, continue to benefit the company.”
Despite the strong sales figures, Herbalife is still facing some hurdles due to uncertainty in global markets fueled by the COVID-19 pandemic and spread of the Delta variant—namely fewer new distributors and preferred customers are entering its business during the most recent three-month period, said Agwunobi.
Herbalife also disclosed in September that it was lowering its fiscal 2021 guidance to reflect a sales-growth range of 4.5 percent to 8.5 percent, down from a previous forecast of sales growth of 9 percent to 15 percent for the fiscal year. The company did not change its sales forecast.
Total Profit: $117.4 million, down 15 percent
Total Sales: $1.4 billion, down 6 percent
North America Sales:
$355 million, down 11 percent
Europe and the Middle East Sales: $322 million, up 4 percent
South and Central America Sales: $89.2 million, up
Asia Pacific Sales:
$393 million, up 11 percent
China Sales: $154 million, down 30 percent
The number of new distributors and preferred customers during the third quarter declined by 19 percent compared to a year ago. Part of it is due to regulatory requirements in some countries. Herbalife noted strict measures in place in India that have reduced new distributors, while part of it is due to the ebb and flow in global economies during the pandemic.
“I think this is temporary. I think it’s a transition, more of a hesitation, maybe, is a better way to say it,” Herbalife President John DeSimone said on the call. “We’ve seen it before. We saw it in ’08 and ’09, and … it came back within a matter of a handful of quarters, and we’re hopeful that would be the case again.”
Still-lingering COVID-19 Issues
The uncertainty brought on by the pandemic has left Herbalife unable to narrow its sales-growth forecast for fiscal 2021. Asked multiple times on the earnings call to clarify guidance expectations for the full year—including once by an analyst who called the provided forecast a “crazy wide range”—company executives deferred to the broad guidance put out
“The guidance range is exactly that. It is wider than we normally would have at this time of the year,” Chief Financial Officer Alex Amezquita said. “It is the impact of the pandemic around the world. … It’s just providing a more challenging environment to forecast than we normally have. And so the wideness in the range reflects that ability for us to kind of bake in some of that unpredictability as it relates to the environment.”
Tupperware sales fell during the third quarter, as demand over the past year declined for one of its flagship products—food storage containers—with more people returning to restaurants and eating outside the home again.
The maker of food storage containers, kitchen goods, and beauty products is midway through an ambitious three-year turnaround plan aimed at rejuvenating its legacy brand after years of revenue declines and falling stock prices—and its CEO said things are going as planned, despite a challenging quarter.
Sales fell during the third quarter by 11 percent to about $377 million, down from $423.7 million during the same period a year ago.
Adjusted profit for the quarter was $63.3 million, which beat analyst expectations. Tupperware said the increase was primarily driven by a lower tax rate, and partially offset by volume loss.
The company has been able to take advantage of growing customer needs to cook and store food at home during the pandemic.
And those eat-at-home trends spurred by the pandemic helped Tupperware sales jump 21 percent and profits surge to $34.4 million during the third quarter a year ago. However, that trend is reversing, in particular in the United States and Europe, said CEO Miguel Fernandez. And it is expected to continue.
Along with that, Tupperware’s business suffered because of pandemic-related market closures in 2021, in particular in Asia and Latin America, as well as a disruption in its United States and Canada business due to the implementation of a new technology platform. Sales decreased domestically and in Canada—where there was a drop of 20 percent during the quarter.
Company officials described the headwinds affecting sales as “transitory in nature.”
Fernandez said comparisons to last year’s sales, when the company overperformed because of pandemic conditions, can overshadow accomplishments it has made on its path to fixing the business.
He highlighted efforts to continue divesting Tupperware’s beauty segment and excess land holdings, revamping its leadership team, executing cost-savings plans, improving cash flow, restructuring debt, and initiating a new growth strategy.
The turnaround, he cautioned, “will not produce linear results as evidenced by the third quarter, but that over time, both top- and bottom-line will improve as we implement our growth plans.
“We’re not even close to the same company that we were 18 months ago, and we’re proud of the progress we’ve made,” Fernandez told analysts. “We acknowledge we still have plenty of work to do, but our confidence in our strategy and execution of the strategy has never been higher.”
Tupperware did not provide a sales-growth forecast for the fourth quarter or fiscal 2021.
Total Profit: $63.3 million, up 84 percent
Total Sales: $376.9 million, down 11 percent
North America Sales:
$103 million, down 11 percent
Asia Pacific Sales:
$112.9 million, down 13 percent
South America Sales:
$69.6 million, up 6 percent
Europe Sales: $91.3 million, down 19 percent
Return to Face-to-Face
With vaccination rates increasing globally, Tupperware is set to start allowing executives and sales leaders to meet in person again. The company also intends to resume incentive trips and events put on hold over the past 18 months because of travel restrictions.
“There’s a huge desire to start to assemble in person and have physical connection again in our business,” said Sandra Harris, chief financial and operations officer.
Too Much Inventory
During the first half of the year, Tupperware bulked up its inventory levels in an attempt to offset supply chain issues and meet increasing demand. But demand for Tupperware products was much lower than expected during the third quarter, leaving the company with a lot of excess inventory, Harris told analysts. So now, Tupperware is focused on selling off that inventory and taking downtime at select factories to mitigate the inventory.
The Georgia-based financial firm reported flat profit for the third quarter, reflecting a pullback from peak sales levels early in the pandemic for its primary product, life insurance.
During the most recent three-month period, the company reported $112.5 million in profit on $693.2 million in revenue. While profit remained the same compared to a year ago, revenue increased by 22 percent.
Sales of term life insurance policies are down from record levels a year ago. Primerica said it issued about 76,000 new life insurance policies during the most recent quarter, down from about 100,199 during the prior year period.
CEO Glenn Williams said the drop in new life insurance policies reflects a “normalization toward pre-pandemic levels.”
Primerica is projecting that fourth-quarter life insurance sales also will be down compared to last year, in the range of 13 percent to 15 percent. But while sales are down compared to last year, Primerica is forecasting term life revenue to be about 10 percent higher than pre-pandemic levels in 2019, said Williams.
Meanwhile, the company’s investment and savings segment remains at record levels, up more than 50 percent on a year-to-year comparison, and eclipsing all of 2020 sales in the first nine months of this year.
“As we look forward to 2022, we have confidence that we will continue to thrive in any business environment and be better positioned for ongoing success,” Williams told analysts during the company’s earnings call.
Death claims associated with COVID-19 totaled $14 million during the third quarter, up from $8 million a year ago. That was above the company’s projections, as the Delta variant led to higher coronavirus-related deaths in the U.S. and Canada, while claims from states where vaccinations rates have been low are making up a bigger volume.
During the third-quarter of this year, Primerica says it incurred a total of $2 million in excess claims not identified as related to COVID-19 but likely tied to the pandemic, “either through delayed medical care, societal issues such as crime or the behavioral health crisis.”
Total Profit: $112.5 million, flat compared to last year
Total Sales: $693.2 million, up 22 percent
Term Life Insurance Policies Sold: fell to 76,001
Recruits: 91,884, down
Licensing for New Recruits Remains a Challenge
During the earnings call with analysts, Williams noted the company is still having problems getting new recruits licensed to sell life insurance—an issue that has been ongoing for Primerica throughout the pandemic. Fewer than 9,400 recruits obtained a new license during the third quarter, which Williams said is below historical averages.
Part of the problem, he said, is getting new recruits to complete training classes virtually, and the company is trying to adapt to offer more in-person options and increase incentives.
“We believe this is a reflection of the current COVID environment rather than an underlying challenge in our ability to get new recruits licensed,” he added.
Riding a wave of recent sales records, Nature’s Sunshine reported strong third-quarter earnings, with a double-digit rise in revenue that marked another best-ever three-month sales period for the company.
CEO Terrence Moorehead said the quarter marked the fifth consecutive three-month period of record net sales with the company reporting $114.7 million in revenue, up 14 percent from the same period a year ago.
The Utah-based nutritional and personal-care products maker had its biggest growth gains in Asia, where sales were up 27 percent, despite strict COVID-19 restrictions in Korea that hampered the company’s largest Asian market. Sales in China gew 19 percent in local currency, and Moorehead said there’s still an opportunity for “tremendous growth potential” in that market.
Sales in three of its four geographic regions were up in the third quarter. U.S. sales remained flat.
“Overall, our strategies have proven to be both powerful and unique, and it’s that combination that has allowed us to stand out in the market,” Moorehead told analysts during the earnings call. Nature’s Sunshine did not provide a sales-growth forecast.
Total Profit: $5.5 million, down 23 percent
Total Sales: $114.7 million, up 14 percent
Asia Sales: $48.4 million, up 27 percent
Europe Sales: $21.8.5 million, up 37 percent
North America Sales:
$37.7 million, flat
Latin America and Other Sales: $6.7 million, up 3 percent
Global Relaunch of Synergy Business
The planned rebranding of Nature Sunshine’s subsidiary—Synergy Worldwide—is moving forward and on track to launch in the United States and Europe in the fourth quarter, Moorehead said. Synergy is a direct seller of nutritional supplements for people with an active lifestyle.
That relaunch of the Synergy brand will include an “end-to-end rebranding” that will “focus on all aspects of the business and is designed to strengthen our ability to attract and retain customers.”
“We’re making progress with the rebranding initiatives that will refresh and reposition the business for future growth,” Moorehead said, noting the Synergy relaunch will be a global initiative that starts in Europe and the U.S.
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