USANA tops $300 million in sales for quarter

By Hank Schultz contact

- Last updated on GMT

USANA tops $300 million in sales for quarter
USANA Health Sciences has reported record revenue in its second quarter, driven largely by results in mainland China.

USANA, based in Salt Lake City, UT, is a network marketing company that sells dietary supplements, functional foods and personal care products. The company’s skin care line, called Celavive, launched in China during the quarter and was a big success there, according to CEO Kevin Guest.

For the second quarter of 2018, net sales were $301.5 million, compared with $257.1 million in the prior-year period, a 17.3% increase year-over-year.

Favorable currency exchange rates positively impacted net sales by $12.5 million for the quarter as compared to the prior-year. Celavive contributed $7 million in incremental sales for the quarter. In markets where Celavive has launched, skin and personal care products accounted for 9.5% of overall sales in the second quarter of 2018, versus 5.7% a year ago.

Most of the company’s customers are now Chinese

USANA has for a number of years found its greatest growth in the Asia Pacific region. Sales in the region accounted for $241.6 million of the total, meaning more than 80% of the company’s sales now come from the region. Sales in the region increased by 21.2% overall. Within the region, net sales:

  • Increased 22.8% in Greater China;
  • Increased 36.1% in North Asia; and
  • Increased 12.5% in the Southeast Asia Pacific region.

Guest told analysts in an earnings call that sales in China will become even more important in the future. Connectivity via the company’s new WeChat portal means national borders are not as important as they were in the past.

“We completed the initial phase of our WeChat platform during the quarter and recently rolled it out to our China customers. In the coming weeks, we will also make this platform available to the rest of our markets around the world,”​ Guest said in the earnings call that was posted in transcript form on the site seekingalpha.com.

“Because many of our customers around the world, outside of China, are Chinese, we expect this new platform to benefit customers in most of our markets. This new platform will make doing business with USANA much more convenient for our associates and customers and improve their overall experience with us,”​ he said.

Online sales a threat to direct selling

Like some other network marketing companies selling nutritional products, USANA has seen results in North America slide. The success of the WeChat rollout in China gives a clue as to why this is the case. 

WeChat is a fully integrated social interaction and transaction platform, whereas in other areas, such as North America, these functions tend to be separated. People interact on one platform, and buy products somewhere else. Customers are increasingly buying products online, and the network marketing model, based on time-consuming face-to-face interactions, is struggling to adapt.

"We have seen a shift in the way people expect to do business with a company. They want it simple, they want it fast, they want it . . . on the front door step and direct sales traditionally isn’t that,”​ he said.

“So we are shifting from that perspective to interact with our customers in a way that they are saying they want to be interacted with. . . . From a direct sales perspective, the key is figuring out how to crack that code and not compromise the distribution channel which we are committed to,” ​he said.

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