CBD product launch part of Nature’s Sunshine restructuring efforts

By Hank Schultz contact

- Last updated on GMT

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Getty Images

Related tags: Hemp, Cbd, hemp extracts, MLM, China

Nature’s Sunshine is the latest company to throw its hat in the CBD ring with a range of products that include added ingredients.

The product launch, which was first announced in September, was highlighted during the company’s recent third quarter earnings call with investors.  CEO Terrence Moorehead said the products are based on a what he called “a series of proprietary whole spectrum CBD oils that deliver targeted levels of bio cannabinoids.”

Added ingredients provide differentiator

Moorehead said the new products are also differentiated from the rest of the crowded CBD marketplace in that they have added ingredients such as herbs, phytonutrients and essential oils intended to boost their functionality.

“This one-of-a-kind hybrid approach results in a more targeted and effective CBD product that naturally helps keep the endocannabinoid system in balance,”​ he said.

The new products are part of a multifaceted strategy to transform the business operations of the Lehi, UT-based multi level marketing company which is nearing its 50th anniversary.  Nature’s Sunshine’s financial results had hit a soft spot a few years ago with a protracted software implementation and a costly and delayed entry into the Chinese market.  And, like many other MLMs, the company has been experiencing softening sales in the key North American market as the strengthening job market made for fewer people seeking part time income opportunities.

Moorehead was appointed in September, 2018 with a mission to revive the company.  In addition to the new CBD line, which aims to capitalize on the sector’s meteoric growth, Moorehead has also revamped the management structure and added USDA Organic and ISO 9001 certifications in the manufacturing arm.

Weathering the storm in China

In the earnings call, which was posted in transcript form on the site seekingalpha.com​, Moorehead said Nature’s Sunshine has weathered the recent storm in the China network marketing sector better than most.  The Chinese government earlier this year turned a spotlight on the sector in an effort to root out apparent abuses and announced a 100-day review of the category.  While other MLMs operating in the country, such as Herbalife, experienced sales declines associated with the review, Nature’s Sunshine managed to maintain its momentum.

The company recorded 16% year over year sales increased in China in the third quarter.  Sales were up 14% in Japan, too. But those increases were offset by decline in South Korea, which has been the company’s biggest market in Asia to date.

Sales declined in 4% North America, were flat in Latin America and rose in Europe, driven mostly by expansion in the company’s business in Russia.

Putting it all together, the company’s sales were essentially flat in the third quarter at $88.5 million compared to $88.9 million in the same period a year previous.  In local currency terms, sales were up 1.4%, the company claimed.

Movements in the company’s stock price have been similarly flat.  Nature’s Sunshine shares have traded in a range between $8 and $10 a share throughout 2019.  That’s off from a recent high of $16 a share in October 2017.

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