Usana retrenches as China’s COVID-19 lockdowns take bite out of sales

By Hank Schultz

- Last updated on GMT

© pailoolom / Getty Images
© pailoolom / Getty Images

Related tags: Usana, China, Direct selling

Usana Health Sciences officials said China’s zero COVID-19 policy hurt the company’s results in its first quarter of 2022. The company has slightly dimmed its full year earnings forecast in response.

Usana, based in Salt Lake City, UT, is a multi-level marketing company that sells dietary supplements, personal care items and foods.  For a number of years now it has recorded most of its revenue in Asian markets, with the lion’s share of that coming from China itself.

Renewed lockdowns and uncertainty in China

Since the beginning of the year, China has gone through a renewed serious of lockdowns as it tries to hold the line on its zero COVID-19 policy in the face of infections caused by the Omicron variants of the virus that have been sweeping the world.

That uncertainty has led the company to revise its full year projections slightly.  The company now expects to bring in between $1.1 billion and 1.2 billion, figures that in both cases were trimmed by $25 million.

“The operating environment in China has become more challenging and unpredictable due to the escalation of COVID-19 and the accompanying lockdowns, restrictions, and other disruptions to individuals and businesses. Shanghai has experienced city-wide lock downs and the Chinese government recently began implementing restrictions in parts of Beijing. At this point, we do not have transparency into whether these restrictions will continue to increase in the coming weeks in Beijing and other areas of China that are important to our business,”​ said CEO Kevin Guest in an earnings call with stock analysts. A transcript of the call is available on the site seekingalpha.com​.

For the quarter, Usana recorded $272.9 million in net sales, which is down 11% compared the same period a year previously.  Of that, $218.4 million was recorded in the Asia Pacific region and $133.7 million within China itself. The net sales in China were off by 10% compared to the year previously.

Related topics: Manufacturers

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