So, the first quarter of the new year has elapsed and we now have the reports from the public direct selling companies. As we have been doing for the last five years, we will briefly review the six largest direct sellers’ quarterly performances with a focus on their growth figures.
Let’s have a look at how Avon, Herbalife, Natura, Nu Skin, Oriflame and Tupperware did in the first three months.
As you will on the below chart all of these giants but Natura posted decreasing sales during the first quarter.
Avon’s performance in the first quarter was another disappointment. Sales was down 18% as compared to the same quarter of 2014. Despite the fact that Avon management said it “reflected a sequential improvement from prior quarters”, the number of active representatives was also down 1%, too.
As far as the regional sales performances are concerned, Latin America’s was -22%, North America’s -18%, EMEA -16%, and Asia-Pacific -1%.
The management stresses the fact that in constant dollars the situation was not that bad and the company globally posted 1% growth.
And yes, North America, Avon’s birthplace still is a major headache. Sales was down 18%, number of units sold was down 25%, and the number of active representatives was down 17% as compared to Q1 of 2014. You may remember that the possibility of Avon’s selling its North American unit has once again made the headlines recently. During the last investors’ call, CEO Sheri McCoy said, “As CEO, it’s my job to balance the needs of all stakeholders, including our shareholders and our representatives. We will continue to monitor progress and evaluate the best path forward for this business. The team is working aggressively to return to profitability, and improving our Active Representatives remains priority one. I continue to believe that we can build value for our shareholders and ideally enhance opportunities for representatives in the U.S.”
As a final note on this, North America has already lost its importance in Avon’s figures. This region now accounts only 13% of Avon’s global sales and is the only region that contributes a loss to company’s profitability.
For more on Avon’s Q1 performance, please click here.
Herbalife reported a 12% decline in its quarterly global sales. Still, CEO Michael O. Johnson was happy, saying, “Our performance this quarter was above our expectations and has resulted in us increasing our full year 2015 guidance.As reflected in our record sales leader retention results, we remain confident that we are building a stable foundation for volume and sales growth.” He was pointing out mainly to company’s growth performance in local currency which was up 4%.
In reported net sales, China was the only region that came with a growth (21%). And the worst figure came from South & Central America (-34%), as compared to the same period of last year. China is becoming a very important market for Herbalife with company’s plans to further strengthen its presence in this country. China currently represents 15% of Herbalife’s global revenue.
For the whole year of 2015, Herbalife management expects a decline in its USD sales between 6.5- 9.5%. This shows a hope for a better performance in the next quarters, despite 80% of Herbalife’s business is outside of the US, and is vulnerable to currency headwinds.
For more on Herbalife’s Q1 performance, please click here.
Natura management closed the quarter with mixed feelings on its end. The company achieved 43% growth in its international markets but the performance in its homeland, Brazil was less than satisfactory: -1.8%. Adding them all up, Natura’s global quarterly growth was 6%.
Brazil has been a challenge for Natura for a while, actually. The management said, “As we mentioned in the previous quarter, our priority is to recover sales growth in Brazil and for this, we rolled out several initiatives that underscore our value proposition.” To re-gain growth in this very important market (accounting for 77% of Natura’s global revenue), Natura launched a new customized credit policy targeted at its consultants, launched a new line of products for the preteen market, a segment in which Natura had no presence earlier, and continued expansion of the Natura Network, which already had 32,000 Natura Digital Consultants as of end Q1 (15,000 in December 2014).
For more on Natura’s Q1 performance, please click here.
-19% was Nu Skin’s comparative growth on a quarterly basis. Nu Skin’s worst performance came from China (-33) which was followed by EMEA (-27%).
Nu Skin management was satisfied with these results, too. CEO Truman Hunt said, “Our business continues to make good progress as we prepare to introduce a number of new products in the second half of the year. We are encouraged by growing enthusiasm among our sales force in advance of launching our new ageLOC skin care and nutritional products. While currency headwinds proved to be slightly more challenging than expected, we continue to believe we are well positioned for growth in the back half of the year.”
However, Nu Skin’s figures were not only hurt by the currency fluctuations. It seems the company has been having challenges on the field, too. Nu Skin’s active sales force declined by 8% globally, too. All regions but South Asia/Pacific (+4%) contributed to this.
Looking forward, Nu Skin expects a second-quarter revenue of $540-560 million which is still considerably lower than what it was in Q2 of 2014 ($650 million).
For more on Nu Skin’s Q1 performance, please click here.
Oriflame reported a 6% decline in its sales in the first three months. The number of active consultants in the quarter decreased by 1% (from 3.5m to 3.4 m). The company’s unit sales were also down by 8%.
Oriflame’s “CIS” region that comprises of Armenia, Azerbaijan, Belarus, Georgia, Kazakhstan, Kyrgyzstan, Moldova, Mongolia, Russia, and Ukraine continued to weaken by posting a 30% decline last quarter. This region, while diminishing in its weight, still is Oriflame’s largest business unit with a 35% share in its global volume. The growth achieved in company’s two succesful regions namely, Turkey+Africa+Asia (+40%) and Latin America (+15%) still was not high enough to offset the decrease in CIS and Europe regions put together.
CEO Magnus Brannstrom commented, “The overall market conditions remain very volatile in the CIS region… and we have seen a slow-down in Russia. The difficulties in some of our core markets are however balanced by the strong performance of our key growth regions Latin America, Turkey, Africa and Asia representing close to 45 percent of group sales in the quarter.”
Oriflame management announced that during the fourth quarter 2014, Oriflame Holding AG was established in Switzerland. As the next step, domicile of the group will be changed from Luxembourg to Switzerland.
For more on Oriflame’s Q1 performance, please click here.
Similar to other US companies, Tupperware prefers to stress its performance in local currency. Tupperware’s quarterly growth in Dollars was -12%. This figure was +3% in local currency.
CEO Rick Goings said, “We delivered right in the middle of our sales guidance in the first quarter, up 3% in local currency, despite a difficult comparison and a few challenged markets, demonstrating the strength of our diversified global portfolio. Significant contributors to sales growth were Argentina, Brazil, China, Tupperware U.S. and Canada, and the South African businesses.”
“Overall we’re modestly pleased with the quarter. While a goodly number of countries were up, there were some disappointments as well,” Goings added during the investors call. One of the major disappointments was from Indonesia, as the sales was down 6% in this Tupperware’s largest market last quarter. Indonesia was followed by the poor performances from France (-14%) and Germany (-11%).
For the next quarter, Tupperware expects a sales decrease of 11-13% in Dollars, as compared to the second quarter of 2014.
For more on Tupperware’s Q1 performance, please click here.