Tupperware, Herbalife, USANA, Primerica lead 2020 growth; LifeVantage stumbles
By: Dave Rauf
Tupperware’s turnaround story continues to evolve.
The maker of food storage containers, kitchen goods and beauty products reported its second consecutive quarter of year-over-year sales growth in the fourth quarter of 2020, according to recently released earnings.
Fourth-quarter revenue and profit were both up in the three-month reporting period. And company executives say they’re more confident that improving financials are a sign the direct selling giant is on the path to recovery after years of revenue declines and falling stock prices.
In an earnings call with analysts, CEO Miguel Fernandez said in 2020 the company successfully revamped its leadership team, executed cost-savings plans, improved cash flow, restructured debt and initiated a new growth strategy. Tupperware had its first quarter of year-over-year sales growth since 2017 during the third quarter of 2020.
“As a result of this performance, we have now achieved two quarters of improving performance on our way to turn around the company,” he said. “With sales growth of 20 percent in the last two quarters, we believe we’ve changed the negative trends of prior years.”
Fernandez is part of a new leadership team, taking over the CEO position in March 2020. Fernandez, the former global president of Avon Products, was announced as CEO at the same time that Tupperware hired Richard Goudis, former CEO of Herbalife Nutrition, to become its executive vice chairman.
Fernandez said Tupperware sales benefited from pandemic-induced restrictions, and some markets exploded, including the U.S and Canada, where sales increased 83 percent last year.
“In 2020, more people have been staying home due to the pandemic, which led to more cooking at home, more time in the kitchen, and more of an awareness to prepare food, minimize food waste, and decrease their use of products made with single-use materials,” he said.
Tupperware did not provide a revenue outlook for 2021. When asked by an analyst if there was any reason not to think 2021 sales could near $2 billion, Fernandez responded: “We’re not giving guidance.”
As part of its turnaround plan, Tupperware also said it reached $192 million in cost savings last year. The company has been cutting expenses, including putting in place temporary furloughs and pay reductions, along with divesting in brands and property, to shore up profit.
New China, Vietnam Leader
Tupperware has acquired a senior leader from Pepsi to run its lagging China business, which experienced a double-digit sales dip this quarter. Ken Yeung, who led e-commerce for Pepsi in China, was hired last month to help Tupperware expand its retail studio presence, accelerate new product innovation and increase its focus on e-commerce in one of the biggest global direct selling markets.
Sales in China were down 11 percent during the fourth quarter, and a key factor was the number of retail studios in the country decreasing by 608, Fernandez said.
Tupperware had announced in October 2020 that it was searching for a new leader to run its China operation.
“We believe China could be a key growth driver for us as we plan to expand into new product categories and channels,” Fernandez said.
- 2020 sales: $1.74 billion, down 3 percent
- 2020 profit: $112.2 million, up from $12.4 million last year
- 2020 North America sales: $525.7 million, up 16 percent
- 2020 Asia Pacific sales: $523 million, down 11 percent
- 2020 South America sales: $245 million, down almost 14 percent
- 2020 Europe sales: $446 million, down almost 7 percent
Herbalife wrapped up 2020 with a record sales year.
The direct selling giant reported total sales of $5.5 billion, as three regions—North America, Asia Pacific and the EMEA—set new revenue records during 2020. In fact, sales were up in all of Herbalife’s global regions during the year, except for South and Central America, where revenue fell more than 3 percent.
In the fourth quarter, five of the largest Herbalife markets, ranging from the U.S. to India and Vietnam, saw sales increase by double digits. In India, sales surpassed $100 million in a single quarter for the first time.
The three-month period ending 2020 marked Herbalife’s best ever fourth quarter for net sales. CEO John Agwunobi highlighted the company’s success throughout the year, saying “each quarter in 2020, set a net sales record for the respective quarter.”
“Simply put, 2020 was an amazing year, the best year ever for Herbalife Nutrition, and a testament to the strength of the company and the resilience of our distribution channel,” Agwunobi told analysts during a recent earrings call.
Revenue in China and Mexico were down during the final three months of 2020.
Agwunobi forecast revenue growth for 2021 in the range of 6 percent to 14 percent.
Sports Nutrition and Targeted Nutrition Segments Exploding
Herbalife continues to see significant growth in two key segments: sports nutrition and functional beverages (targeted nutrition). While weight-loss products, which increased sales year-over-year, are still the company’s biggest earners, the segment is being outperformed by sports nutrition and targeted nutrition products. Targeted nutrition grew by 20 percent over 2019, and sports nutrition by 25 percent, boosted by the entrance of sports and fitness products into China and India. Herbalife President John DeSimone said he expected that “sports will outgrow the other two categories, both in 2021 in the next few years.”
“That’s where our focus is,” he said, when asked by analysts about future products.
Strong US Growth Bolstered by Southern States
Herbalife again benefited this quarter from surging U.S. sales during the pandemic. In the fourth quarter alone, the company experienced a 32-percent increase in sales domestically, along with a 17-percent bump in new distributors and a 44-percent increase in preferred members. But Agwunobi highlighted the growth of nutrition clubs in the U.S. as a key factor, saying the number of clubs increased from 7,700 to 9,000. And that growth came “from more rural parts of the country, such as Alabama, Tennessee, and Louisiana, where nutrition clubs have become embedded in small town communities,” he said.
China Imposes New Direct Selling Requirement
Sales in China were down for the fourth quarter, and Herbalife executives said that was caused, in part, by new requirements from the government on distributors.
Agwunobi said: “We believe one factor contributing to these declines is a recent enhancement made to the requirements for our sales representatives to be eligible to apply to become independent service providers. While we believe this change was a contributing factor to the decline in the fourth quarter, we believe this enhancement will ultimately strengthen our business by improving the quality of our independent service providers.”
- 2020 sales: $5.5 billion, up almost 13.6 percent
- 2020 profit: $372.6 million, up almost 20 percent
- 2020 North America sales: $1.372 billion, up 34 percent
- 2020 Asia Pacific sales: $1.3 billion, up almost 8 percent
- 2020 China sales: $809 million, up almost 8 percent
- 2020 EMEA sales: $1.2 billion, up 21 percent
USANA Health Sciences reported a fourth quarter with strong numbers—including more customers and higher net sales—and is forecasting 2021 to be another year of growth.
The company said it made a $127 million profit in 2020 on sales of $1.13 billion.
CEO Kevin Guest attributed the success to the company’s improved online efforts, including updated websites and digital shopping experiences, and said the company also rolled out several new digital tools “that will allow our sales force to continue sharing and selling USANA products in a predominantly virtual environment.”
“In 2020, we found that we were well positioned, well prepared, and nimble enough to adapt to and succeed in this unprecedented operating environment,” Guest told analysts during a recent earnings call. “Because of this, we ended the year with more customers, higher net sales and record earnings per share. As you can see from our initial outlook, we are expecting 2021 to be another record year for USANA.”
Guest said the company is focusing this year on continuing to bolster its digital strategy, drive growth in existing markets—in particular China—launching a new product line, and pursue new international expansion opportunities.
USANA has forecast sales growth in 2021 will be 7 percent to almost 9 percent, and Guest said those figures are based on an “expectation that we will see progress through 2021 toward a more normalized operating environment.”
New International Markets by 2022
Guest told analysts that for the past several years, the company’s focus has been on growing existing markets. But “we feel very confident that it’s time for us to move into exploring other opportunities around the globe,” he said, noting that international expansion won’t be USANA’s primary growth vehicle.
President Jim Brown added to that sentiment, saying expansion plans are about 10 to 24 months out. “There’s just a lot of work that has to be done for setting up a market, and that’s everything from logistics to where and how we are going to produce our products to hiring the right staff, all of that goes down the path,” Brown said. “So you’re looking at an impact probably by the end of ‘22 when we look at starting up in a new market.”
2Q Product Launch
USANA is planning to launch a new product offering in the next fiscal quarter, according to company executives who participated in the earnings call. The product line is being called Active Nutrition, and Brown described it as “more of a full program” that will involve protein bars and shakes.
USANA is currently getting production ready for the product launch, and plans to launch it into selective markets within the next three to six months.
“We’ve actually started already because we’re looking at launching Active Nutrition, and we talked about that really the impact for a handful of markets will be in the second quarter, and then we are going to have additional phases of launch throughout 2021,” Brown says. “So we’ll see the full impact of Active Nutrition really into 2022, but we’ll see those trends happening in the third and fourth quarter of this year. It’s much more than just a food program … there’s influencers, there are all kinds of different ways to get more of a community around this area instead of just more foods.”
- 2020 sales: $1.13 billion, up 7 percent
- 2020 profit: $127 million
- 2020 Asia Pacific sales: $915 million, up 7 percent
- 2020 China sales: $530 million, down 1 percent
- 2020 Americas and Europe sales: $219 million, up 5 percent
The Georgia-based financial services company turned a profit in the fourth quarter of 2020 despite a massive uptick in COVID-19 death claims during the three-month period.
During the three-month period, the company netted $100 million in profit, and Primerica, which sells term insurance policies and annuities, ended the year with record revenue of $2.2 billion, CEO Glen Williams told analysts during an earnings call.
In all, Primerica said issued life insurance policies were up 23 percent in 2020—throughout the height of the pandemic—and sales in its Investment and Savings Product segment reached a new high of $7.8 billion last year.
Despite record revenue in 2020, the year was marked with COVID-19-related hurdles. Death claims associated with the ongoing pandemic totaled $33 million during 2020. Of that, $14 million is attributed to the fourth quarter, a three-month stretch that Williams said marked the highest level of COVID-19-related death claims since the onset of the pandemic.
Meanwhile, other efforts were also affected by the coronavirus. Pandemic-related exam backlogs and training capacity shortages negatively affected efforts to get new agents through the permanent licensing process.
COVID-19 impacted customer behavior across the board for the company, resulting in robust sales last year, and “we continue to see strong demand for term life insurance products,” Williams said, noting that sales in January 2021 were stronger than last year’s pre-pandemic figures. But Williams noted that he expected “sales volume to moderate from record 2020 levels.”
“A key question for 2021 will be whether we see sustained client sentiment in favor of our products and opportunity. Our view is that the disruption in 2020 clearly reveals client needs in these areas and a record number of clients took action,” he said. “These needs that suddenly became priorities have existed for many years and will continue to exist in 2021 and beyond.”
Recruiting at ‘Record Levels’
Williams said uncertainty in the job market last year led to “record recruiting.” Primerica reported adding 80,0599 new recruits during the final three months of 2020, a 33 percent increase from the same time a year ago.
Primerica Convention Cancelled for 2021
Williams also used the earnings call to announce that Primerica will forgo its bi-annual convention this year, rescheduling the event that typically draws up to 50,000 people for Summer 2022. In its place, Primerica is planning “a series of virtual meetings and incentives to help sustain momentum,” Williams said.
- 2020 profit: $386.2 million, up 5 percent
- 2020 revenue: $2.2 billion, up 8 percent
LifeVantage revenue and profit declined in the second quarter, as sales in the U.S. and Mexico slumped while the company’s remaining markets—spanning Europe, Asia and New Zealand—remained flat.
The Utah-based supplement company reported profit of $3.8 million, down by double-digits compared to the same time a year ago. Revenue during the second quarter fell by more than 3 percent.
President and CEO Steve Fife told analysts during a recent earnings call that some of the decreases were partially offset by a virtual conference in October and the launch of limited-time flavors of its AXIO drink mixes. Those efforts, he said, led to increased average revenue per account and increased sales associated with seasonal product promotions during the second quarter.
Fife reiterated the company’s financial guidance for the fiscal year at a range of $240 million to $251 million, but cautioned that he now anticipates it could come in toward the “low end” of that scale.
LifeVantage announced in early February that Fife, who had been serving as interim president and CEO, would now assume those titles on a permanent basis. Fife had previously served as LiveVantage’s chief financial officer, a position he held since joining the company in 2017. He replaces former CEO Darren Jensen, who had served as president and CEO since 2015 and resigned in September 2020. Fife will continue to serve as the company’s CFO until a replacement is found.
New Product Launch Expected in Second Half of 2021
During the call with analysts, Fife said the company is planning to maintain an “aggressive launch schedule” for new products. To that end, he announced the pending launch of a new daily wellness supplement that is “designed with busy and active people in mind to give the extra immune support needed to address daily stressors and physical wear and tear on the body.”
- Revenue halfway through fiscal 2021: $113.8 million, down 3.1 percent
- Revenue in Asia, Pacific and Europe segment: $17.1 million, up 1 percent
- Total distributors at the end of 2Q: 174,000, down 8,000 from the same period last year with all losses stemming from distributors in the Americas market
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