Continued pandemic issues in China hit Usana hard
Usana, a multilevel marketing company based in Salt Lake City, UT, is one of the world’s largest MLMs focused mainly on nutrition products. The company sells a wide variety of dietary supplements, functional foods and personal care items.
For a number of years now China has been the company’s biggest market. It now accounts for more than 50% of overall revenues. The Asian markets as a whole now account for more than 80% of overall revenues.
Sales fell in all markets
Overall revenue in the company’s fiscal 2022 fell from $336.8 million in the second quarter of 2021 to $264.5 million in the second quarter of this year, representing a 22% decline.
Sales in China fell by almost 15% on a year over year basis but fell even more steeply in Southeast Asia Pacific (down 37%) and North Asia (down 23%). Sales in the Americas and Europe fell by 18.7%.
“We continue to experience COVID-related disruptions in several key markets, including mainland China. This caused participation in sales programs, Active Customer counts, and financial performance to come in lower than anticipated,” said Kevin Guest, Usana’s CEO and board chairman. “Although many of these disruptions were outside of our control . . . our second quarter results were not up to our standards.”
New M&A activity?
Guest said the company has several plans to turn the sales slide around, including improving the company’s digital sales platforms and its training for new active distributors, which are the lifeblood of any network marketing company. Guest also said Usana will be on the lookout for “accretive business development opportunities,” which seems to indicate it will be in the market for acquistions or new partnerships, something the company has not participated in recently.
Forecast down, share price plummets
The company’s stock price is off by almost 50% from its all time high, which was recorded in 2019. Since then, the price per share has fallen from almost $130 a share to less than $68 today. The high price for 2022 was $102.94, recorded on Jan. 3.
The company expects net sales for the full year to come in at between $1.02 to $1.07 billion. By comparison, Usana brought in $1.19 billion in 2021 and $1.35 billion in 2020.