Industry’s positive results throughout 2021 had started showing signs of changing in the last quarter. This continued in 2022 and seven major direct sales companies’ 2022 Q4 reports indicate external challenges continued till the end of the year.
This review here includes Herbalife, Medifast, Natura &Co, Nu Skin, Oriflame, Tupperware and USANA’s global sales results.
Herbalife’s global sales were down in 2022 for the first time in the last five years. 2022 reported sales were $5.2 billion, representing a 10% decline. Company’s Q4 revenue performance was also down 10%.
At the regional level in Q4, Asia-Pacific reported flat sales. Asia-Pacific region was led by India which grew 22% and Vietnam, which was up 9%. Revenues in the rest of the regions dropped: Latin America -3%, North America -9%, EMEA -15, and finally China -45%. China is Herbalife’s smallest region in terms of the generated sales volume.
Chairman and CEO, Michael O. Johnson said, “Here’s my promise, our sales will grow, and our results will improve. I’m fully aligned with our Board, our investors, our distributors and our employees to usher in a new era of growth for Herbalife.”
He explained how they will achieve this: 1) By growing the product portfolio to position Herbalife as the premier public health and wellness company, 2) By enhancing distribution that includes modernizing the compensation structure, and through “Herbalife One”, company’s unified data-powered global digital platform. Johnson said this platform will enable growth by delivering a best-in-class digital experience for their distributors and consumers.
For more on Herbalife’s fourth quarter performance, please click here.
Medifast reported $1.6 billion sales in 2022. This was a 5% increase from 2021. Company’s 2022 Q4 revenue performance on the other hand, was -11%.
“We’ve placed a substantial focus on driving stability in customer retention rates, and with customer satisfaction metrics at all-time highs, we’ve seen retention return to and hold at normal levels,” said Dan Chard, Medifast’s Chairman and CEO. “Our attention is now on driving productivity and Coach growth which were both disrupted in the second half of last year.”
During the investors call, management said they will continue offering more support for expansion into the Hispanic segment of the United States. And, ultimately, Medifast believes there is an opportunity for them to expand into Latin America.
The company expects first quarter 2023 revenue to be in the range of $300 million to $320 million. Medifast’s 2022 first quarter revenue was $418 million. Medifast has a little more than 60,000 active earning coaches on the field.
For more on Medifast’s fourth quarter performance, please click here.
Natura &Co’s consolidated fourth quarter revenues were down 11%. 2022 annual revenue growth was -10% (reaching BRL 36.4 billion – approx. US$ 6.9 billion).
Within the group, Natura brand’s sales in Latin America were 3% in Q4, with strong momentum in Brazil. In fact, brand’s revenue grew 18% in Brazil. Avon brand’s growth in Latam was down 11%. Avon benefited from good performance in Argentina, but impacted by a decrease in Mexico.
Avon International (includes all markets excluding Latin America) posted 24% decline in quarterly sales. However, excluding Russia and Ukraine, revenue decrease was 6%.
The Body Shop reported 21% sales decline in Q4. The Body Shop at Home’s performance has returned to pre-pandemic levels, company said. In January, the company announced the closure of The Body Shop at Home business in the US.
Aesop’s Q4 revenue decreased by 2%. Aesop’s retail and wholesale sides showed solid growth, partially offset by a softer e-commerce performance that reflected post-Covid normalization of consumer behavior. Aesop’s successful entry into China exceeded management’s expectations, as reported. As announced in last November, Natura &Co continues to evaluate strategic alternatives for this brand. Among the alternatives evaluated is the possible sale of stake in Aesop. Aesop generates about 8% of the group revenues.
Currently, 31% of group revenues are generated in Brazil. 27% comes from the rest of Latin America. 24% of sales are from EMEA, 12% from Asia-Pacific and finally, 6% from North America.
Fabio Barbosa, Group CEO of Natura &Co, said, “We started 2022 navigating in a challenging macroenvironment, which worsened with the war in Ukraine, and uncertainty surrounding the performance of a few business units after a post-pandemic change in consumer behavior. In this environment, we decided in mid-2022 to reassess the group’s growth model to enter a new stabilization cycle. Important changes were carried out, such as a stronger focus on profitability and cash conversion (with incentives adjusted accordingly), a revision of the cost structure and the role of the Holding company.”
For more on Natura &Co’s fourth quarter performance, please click here.
Nu Skin reported US$522 million quarterly (-22%) and US$2.226 million annual revenue (-17%).
All regions posted significant declines as compared to the
last quarter of 2021: Americas -10%, Japan -15%, Southeast Asia/Pacific -15%, Hong Kong/Taiwan -17%, EMEA -19%, South Korea -35% and Mainland China -43%. In “Americas”, the U.S. market grew 4% in 2022 on top of the 32% revenue growth in 2021.
The graph on the right shows regions’ volume contributions.
“We made steady progress toward our Nu Vision 2025 strategy, despite persistent macro-economic challenges, which primarily included COVID-related disruptions in Mainland China, global inflation and foreign currency headwinds,” said Ryan Napierski, Nu Skin president and CEO, and added “As we continue to expand our affiliate-powered social commerce model, we will focus on stabilizing performance in more challenged regions and leveraging best practices from our markets that are further along in their social commerce transition. Lastly, as we navigate the year ahead, we will continue to be conservative in our guidance and prudent in our cost management while we invest in our future.”
Management announced its 2023 Q1 revenue expectation as between $450- $490 million (-26% and -19%) and 2023 full year expectation between $2.03-$2.18 billion (-9% and -2%). CFO Mark Lawrence commented on this, saying, “Our initial 2023 guidance assumes the global macro environment remains challenging in the near-term, improving throughout the year.”
For more on Nu Skin’s fourth quarter performance, please click here.
Oriflame’s quarterly sales decreased by 5% to €264.4m (€277.3m). Company’s 2022 annual sales were also down 9%. Company’s yearly revenues have been declining since 2017.
In the last quarter of 2022, three regions reported declining sales: Latin America -1%, Turkey & Africa -13% and Asia -25%. The only region that posted growth was Europe & CIS (+2%). In Asia, the company was especially unhappy with the results in China, India, Indonesia and Vietnam.
Fragrance was Oriflame’s strongest product category (25%), taking over the leadership from skin care (24%). These two were followed by wellness (17%), personal & hair care (16%), and color cosmetics (14%).
“We are fully committed to turning around the current negative sales trends, by implementing the strategic initiatives around our product assortment and further digitalisation of our business. We will continue to explore new market openings where we see opportunities and encouraged by the successful opening of Germany. China is now starting to open up, which should help us to increase sales in this market going forward,” said CEO Magnus Brännström.
Management also announced on the quarterly report, the departure of the current CFO Gabriel Bennet, after serving the company for 15 years. He will be replaced by Carl Rogberg who most recently was Avon International’s Vice President of Finance.
For more on Oriflame’s fourth quarter performance, please click here.
Tupperware reported $314 million sales for Q4, a decrease of 20% year over year, and $1,306 million for 2022, a decrease of 18% versus 2021.
In the last quarter, South America’s sales increased 18% led by strong performances in Brazil and Argentina. In North America, Tupperware’s sales declined 19%. Asia-Pacific’s sales were down 31%. Sales in Europe also decreased by 30%, mostly due to lower sales force activity and B2B business that did not materialize in line with management’s expectations.
U.S. and Mexico, Tupperware’s two large markets, were impacted by lower sales force productivity, and lower volumes due to price increases. The U.S. was additionally impacted by a longer-than-expected adoption of the compensation plan change. U.S. sales were down 19% and Mexico sales were down 7% in 2022.
“We entered the year optimistic about our progress in improving our business economics and executing on our growth plans. Events did not unfold in our favor, so we reacted quickly to the challenges. Importantly, we remained unwavering in our pursuit of building a broader Tupperware ecosystem in which to reach consumers eager to interact with our products. In the US, our first major retail expansion effort exceeded our expectations,” commented Miguel Fernandez, CEO of Tupperware.
Towards the end of 2022, Tupperware started selling its products at 1,900 Target stores in the U.S. In total, the company has 50 retail chain customers around the world, Miguel Fernandez said. The company announced it will continue to invest in B2B efforts in retail and home TV shopping.
For more on Tupperware’s fourth quarter performance, please click here.
Fourth quarter net sales at USANA were $228 million versus $267 million (15%). during the prior-year same period. USANA’s 2022 annual sales were also down -16%.
For the Q4 of 2022, Greater China reported -6%, North Asia -16%, Americas & Europe -19%, and Southeast Asia & Pacific -29% revenue growth.
The company currently operates in 24 markets and Greater China remains as USANA’s largest region, generating half of company’s global revenue.
Kevin Guest, CEO and Chairman said, “While 2022 presented a challenging operating environment for both USANA and our industry, we remained focused on executing our long-term growth strategy. In 2022, we made progress in several areas that position USANA for future growth. These areas include digital commerce initiatives to support our business, new market expansion, the launch of our Affiliate program in select markets, and the completion of two acquisitions.”
Management reiterated its 2023 revenue expectation as $850 – $950 million.
Earlier this year, USANA announced a CEO transition plan. According to this, Kevin Guest will be leaving CEO role, transitioning to the role of Executive Chairman effective July 1, 2023. At that time, Jim Brown, USANA’s current President, will be named CEO.
For more on USANA’s fourth quarter performance, please click here.
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Hakki Ozmorali is the Founder of WDS Consultancy, a management consulting and online publishing firm in Canada, specialized in providing services to direct selling firms. WDS Consultancy is the publisher of The World of Direct Selling, global industry’s leading weekly online publication since 2010. Hakki Ozmorali 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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