Direct selling companies’ financial reports indicated they struggled with several challenges throughout 2022. While we see similar signs in their first quarter reports, too, there are also promising indications.
This review here includes six public direct sellers’ (Herbalife, Medifast, Natura &Co, Nu Skin, Oriflame, and USANA) global sales results.
Herbalife reported 6% decline in its first quarter sales compared to last year same quarter ($1.252 billion versus $1.336 billion). For the quarter, the number of active sales leaders was approximately 462,000. This figure is again, 6% below last year.
Among the regions, China (-36%), North America (-9%) and EMEA (-9%) announced declining sales. Asia Pacific (+1%) and Latin America (+2%) reported revenue increases. Asia Pacific region’s performance was led by the strength in India, which grew 18%. Within the Latin America region, Mexico’s sales grew by 8% and Brazil’s, by 4%.
CEO Michael O. Johnson said, “We are in the midst of a significant change and we’re more comfortable with that than we have been in a long time. And I’m going to continue on the promise that we made in February that our sales will grow and our results will improve. We’re evolving. And that’s what’s been happening over the last six months and it’s going to continue.”
Herbalife is planning to launch a brand-new e-commerce platform in two markets within 2023. Most of the remaining markets will have this in 2024 and this new platform is aimed at enhancing ease of recruiting and retail transactions.
The company also announced a leadership succession plan. According to this, current COO Mark Schissel will be retiring after 16 years of service. Frank Lamberti will be the new Chief Operating Officer, Ibi Montesino, EVP and Chief of Staff, will have increased management authority and Rob Levy, will be appointed as Regional President Americas. All these will be in effect as of July 1, 2023.
For more on Herbalife’s first quarter performance, please click here.
Medifast’s Q1 2023 sales were $348.6 million (down 16% versus Q1 2022). The company said this was due mainly to lower number of active earning OPTAVIA Coaches and lower Coach productivity. The average revenue per active earning OPTAVIA Coach was $5,945, compared to $6,536 for the first quarter of 2022.
Total number of active earning OPTAVIA Coaches also decreased to 58,700 from to 63,900 for the first quarter of 2022 (-8%).
Medifast will be announcing a new product line in its July convention. The management anticipates this is going to more than triple the size of the company’s addressable market.
We had heard before Medifast’s focus on the Hispanic segment. The company is happy now with the continued strong increases in the U.S., and that is expected to be paving the way for company’s expansion to Latin America. The management said they are not yet ready to announce that expansion, though.
Medifast expects its second quarter 2023 revenue to be in the range of $250 million to $270 million. This figure was $453.3 million in Q2 2022. The company did not provide full year guidance.
“We’re pleased to see revenue and operating income both ahead of expectations in the quarter, as we continue to adjust to the changing dynamics of the business environment. Sustainable long-term growth is at the core of our focus, and we are undertaking a number of initiatives to return the business to a growth trajectory, ” said Dan Chard, Chairman and CEO.
For more on Medifast’s first quarter performance, please click here.
Group’s consolidated first quarter revenues were BRL 8.021 billion (approx. US$ 1.6 billion). This figure was BRL 8.253 billion last year (-3%).
Natura brand in Latin America reported 17% sales increase. Growth was 25% in Brazil and 26% elsewhere. The positive performance out of Brazil was mainly driven by the acceleration in Argentina and Colombia, the company said.
Avon brand in Latin America, on the other hand, did not perform as good. Revenue was down 15%, largely impacted by decreases in Mexico and Chile.
Avon International reported 13% revenue decrease in the first quarter. Excluding Russia and Ukraine, though, the decrease was 4%.
The Body Shop’s revenue was down 17%, Aesop’s was up 9%.
“From a revenue standpoint, the highlight remains the Natura brand, which continued its strong momentum from last year, with Natura Brazil sales growing 25%, led by volume and strong productivity growth,” commented Natura &Co group CEO Fabio Barbosa.
Following the first quarter, Natura &Co made a few important announcements:
1) Selling of Aesop to L’Oréal for an enterprise value of US$2.5 billion,
2) Full integration of Natura and Avon in Peru that includes integration of their sales forces,
3) Beginning of the ‘next chapter’ at The Body Shop with Ian Bickley taking over as interim CEO after David Boynton’s departure.
For more on Natura &Co’s first quarter performance, please click here. For a comprehensive review of the company’s history, please click here.
Nu Skin’s first quarter 2023 sales declined 21% compared to last year’s first quarter (from $625 million to $481 million).
All regions reported negative sales growth performances: South Korea -3%, EMEA -10%, Hong Kong/Taiwan -10%, Japan -15%, Americas -18%, Southeast Asia/Pacific -15%, and Mainland China -45%. Once the largest region of Nu Skin’s, China now ranks the third behind Americas and South Korea.
Ryan Napierski, Nu Skin President and CEO said, “First quarter results were in line with our guidance reflecting better-than-expected performance in South Korea and Mainland China, while the Americas and Southeast Asia continued to be impacted in large part by macro-economic factors including inflation and recession concerns. Although our results were down due to a difficult comparison and persistent macro-economic challenges, we continue to make steady progress.”
Nu Skin anticipates $485 to $525 million sales in the second quarter (-14% to -6%), and $2.03 to $2.18 billion in 2023 (-9% to -2%).
During the investors meeting following the quarter, Ryan Napierski stressed his optimism, saying, “We’re optimistic of our future. We’re looking forward to second half and the back half of the year and a return to growth in the fourth quarter.”
For more on Nu Skin’s first quarter performance, please click here.
Oriflame reported EUR 208 million sales in the first quarter. This represents 10% decline compared to Q1 2022.
In its Latin America region, sales increased by 7%. Quarterly growth figures in Oriflame’s remaining three regions were negative: Europe & CIS (-5%), Asia (-26%), and Turkey & Africa (-32%). Europe & CIS is company’s largest region in terms of the sales generated (56%), followed by Asia (20%).
The company said it remains a priority to drive higher unit sales and activity going forward, and full focus is on the implementation of its strategic initiatives around digital and product assortment.
From the product category perspective, skincare and fragrances were the largest contributors to sales, and wellness category continued to gain share in the quarter.
As previously announced, company’s new Chief Financial Officer Carl Rogberg started working for Oriflame on March 1, 2023. He succeeded Gabriel Bennet who is leaving after 15 years at this role.
For more on Oriflame’s first quarter performance, please click here.
USANA’s Q1 sales came as $248 million (versus $273M in Q1 2021). This meant 9% decline in quarterly sales.
China is USANA’s largest region with approximately 50% share. Sales in China were down 7%. The other regions’ performances were: North Asia -1%, Americas & Europe -11%, and Southeast Asia-Pacific -15%. Yet management was satisfied since the “results were modestly ahead of expectations” as they commented.
CEO and Chairman Kevin Guest said, “USANA’s solid first quarter performance was driven by several initiatives that helped stabilize active customer counts and contribute to sequential quarter net sales growth. Our results during the first few weeks of the quarter benefitted from increased demand for several of our health products in China following the government’s shift in COVID policy. In addition, our announcement of product price increases in several markets stimulated product purchasing ahead of those increases.”
Returning to live meetings around the world, USANA held several events in the first quarter. Following the end of the quarter, the company held its first large scale event in China region in three years and hosted nearly 10,000 associates. Towards the end of this year, USANA is planning to open India as its first new market in five years.
In early February, USANA announced that Kevin Guest will be transition to the role of Executive Chairman effective July 1. He will be replaced by Jim Brown, company’s current President.
Because of the solid start to the year, management has decided to raise the lower end of 2023 sales outlook to become $875 – $950 million.
For more on USANA’s first 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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