Gains in Asia Pacific region boost Usana to record-breaking third quarter

Usana is a  network marketing company focused on dietary supplements, functional foods and personal care products. The company, which is based in Salt Lake City, UT, posted its strongest gains in Asia, even as gains in China were muted by a continued hangover from that county’s ‘100-day review’ of multi level marketing operations.  

China sales grow slowly, rest of Asia explodes

Sales in Mainland China, by far the company’s biggest single market, increased by 3.9% year-over-year for a total of $136 million. As a result of the regulatory review and COVID-19 restrictions, in person meetings have been severely curtailed in the country.  This is particularly troublesome for multi level marketing firms like Usana that rely on in person events to energize its sales force.

Sales elsewhere in Asia more than made up for the underperforming China market.  Sales in North Asia (South Korea and Japan) increased by 24.3% and in the Southeast Asia Pacific region sales were up by more than 40%.  More than 80% of the company's overall sales now come from Asia.

Usana brought in $298.5 million in revenue in the quarter, and also posted $1.44 in earnings per diluted share. Both figures were records.

Immune health, collagen lead the way

Usana CEO Kevin Guest said immune health supplements were the biggest sellers in the quarter, which ended on September 26, 2020.  But what did come as a minor surprise was that collagen supplements were also leading sellers.

To compensate for lockdown restrictions the company conducted its annual meeting in China and its worldwide annual meetings virtually.  The company said this allowed even more people to participate than would have been the case for an in person event.  While Guest said a lot has been learned on how best to conduct virtual events, the company does plan to return to its face to face platform when that again becomes possible.  

“The first half of the year, I think for certain, we’ll have most of the events on a virtual [basis] and then we’ll kind of wait and evaluate and kind of see what the environment is,”​ Guest told stock analysts during an earnings call. A transcript of the call was posted on the site seekingalpha.com.

Guest said Usana is planning a major product launch early next year branded as Active Nutrition.  While he didn’t share details about the products in the line he did say some are being field tested by athletes at the moment.  The target audience for the new line is female consumers in the 25 to 35 age range.