Latin America to be special focus of restructuring plan for Nature's Sunshine

By Hank Schultz contact

- Last updated on GMT

Getty Images
Getty Images
Nature’s Sunshine, a network marketing company that concentrates on the sale of dietary supplements, announced a plan to restructure its business in Latin America and elsewhere as it eked out a slender overall sales increase during its second quarter of 2019.

The company, which is based in Lehi, UT, is one of the oldest network marketing companies in the industry that focuses on the sale of nutritional products. The company was founded in 1972.

Difficult stretch for the business

Nature’s Sunshine had gone through a rough patch in terms of corporate earnings.  It suffered through an apparently bungled software implementation that hurt results.  The company also had an unusually difficult time obtaining a license to do business in China, where some other similar MLMs, notably Usana and Herbalife, had seen large sales increases during the time Nature’s Sunshine was forced to sit on the sidelines.

Now that the company is finally doing business in China, it seemed to have weathered the fallout from that country’s ‘100-Day’ review of the nutritional products sector better than some of its competitors.

“China experienced a disruption to sales from the government's 100-Day review of the industry, which slowed business activity. However, our China business continues to enjoy positive growth. For the quarter, we generated 2% growth on a local currency basis and are up 24% for the first 6 months of the year,”​ said CEO Terrence Moorehead. Moorehead made his remarks in an earnings call with stock analysts. A transcript of the call was posted on the site seekingalpha.com.

With those challenges behind it, the company can now focus on what Moorehead said is a through corporate restructuring. The revamp will include a focus on new product development and on ongoing effort to modernize the company’s back office systems.  And the restructure includes a significant reduction in corporate headcount.  Moorehead wouldn’t say how many employees have been let go, but did say the company recorded $1.6 million in severance charges in the second quarter.

Stopping the slide in Latin America

One aspect of the business that will come in for particular attention is the company’s operations in Latin America.   Sales declined in both North and South America in the second quarter.

“Latin America, which includes our businesses in Mexico and Central and South America, will report directly to me, as we begin a major transformation initiative to turn around this business. Our goal is to create a more profitable business unit and build a regional operating model with local management to key members of the executive team helping to spearhead the effort to turn around our Latin American business,”​ Moorehead said.

Nature’s Sunshine recorded a 2% overall sales increase year over year in the second quarter when taking currency fluctuations into account. On a straight dollar-to-dollar basis, sales were off slightly compared to the same period in 2018. Based on local currencies, sales rose in the Asia/Pacific region and in Europe.  Sales declined in North America and were off by the largest margin in Latin America.

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