Multi-level marketers (MLM) of dietary supplements and personal care products USANA Health Sciences Inc. (NYSE: USNA) and Nu Skin Enterprises Inc. (NYSE: NUS) reported higher earnings and double-digit year-over-year percentage growth in the first quarter (Q1) of 2018. The companies attributed improved quarterly results largely to new product launches and other growth initiatives.
In updated guidances, Nu Skin and USANA now anticipate higher revenues for fiscal year 2018.
USANA reported the highest quarterly sales in the company’s history—US$292 million in sales, representing a 14.4 percent year-over-year increase. Similarly, Nu Skin reported strong revenue growth in its Q1 earnings report—total sales of $616.2 million, representing 24 percent year-over-year growth.
Results for both companies were strong throughout Asia, including in Mainland China.
In updated guidance, USANA predicted net sales between $1.13 billion and $1.17 billion in 2018; that’s up from a previous estimate between $1.11 and $1.16 billion, “to reflect our first quarter results and the momentum we continue to see in the business around the world,” the company stated in its quarterly Securities and Exchange Commission (SEC) filing.
USANA largely attributed the quarter’s success to the launch of its Celavive® skin care line and to targeted product promotion in China, contributing approximately $9 million and $11 million in incremental sales, respectively.
The line of topical, anti-aging products, which launched in all markets except China, is considered “an opportunity to acquire a new consumer base,” the company revealed in the SEC filing. Though sales of the line have “normalized” since its launch, USANA expects sales to grow steadily throughout the year to achieve roughly 10% of the company’s net sales by year end.
USANA’s targeted product promotion efforts in China will continue throughout 2018, but won’t garner the high sales seen in Q1, the company predicted. However, China will remain a focal point for USANA in 2018 with the upcoming launch of its Celavive line in the Chinese market and plans to roll out a WeChat platform in China in the second quarter (Q2) of 2018.
WeChat is a Chinese multi-purpose messaging and social media app widely known as China’s “app for everything” because of its wide range of functionality. Use of social media—and WeChat specifically—is dramatically impacting Chinese commerce. The platform is intended to make it easier for customers in China to do business by enabling them to introduce USANA to new customers, complete sales of products and enroll new customers.
USANA, an MLM based in Salt Lake City, Utah, reported sales growth in all Asian markets (Greater China, Southeast Asia Pacific and North Asia) where it generates most of its sales. The Asia-Pacific region garnered 79.5% of the company’s Q1 net sales—totaling $232.1 million and representing 19% year-over-year growth.
USANA reported the highest sales growth in North Asia, yielding a 39.6% year-over-year increase, driven primarily by customer growth in South Korea.
A stark contrast, sales in the America and Europe region decreased by 0.6% year-over-year. USANA referenced initiatives to improve results in this region, including opening four new European markets in June.
“Although we are forecasting sales to be relatively modest in these markets initially, we believe that the excitement of entering these new markets will help generate momentum within the Americas and Europe region and, more importantly, we are pleased to be able to offer USANA products to more families across the globe,” USANA’s SEC report stated.
Provo, Utah-based Nu Skin attributed its Q1 growth to increases in both customers and sales leaders (11 percent and 16 percent, respectively), “reflecting the early the early results of our growth strategy that is focused on platforms, products and programs,” an SEC filing noted. Nu Skin specifically pointed to interest in its ageLOC LumiSpa skin treatment and cleansing device, launched in Q4 2017, as a key driver.
Nu Skin implemented an improved global sales compensation plan, Velocity, in the Pacific region in Q4 2017. The plan will launch in Taiwan and North American during Q2 2018.
Adding approximately $16 million in revenue and 3% year-over-year growth to Nu Skin’s Q1 earnings is the acquisition of manufacturing and product-packaging companies during the quarter.
Analysts at Deutsche Bank, who reported Nu Skin’s Q1 earnings exceeded its revenue predictions by 11%, are encouraged by Nu Skin’s growth initiatives.
“LumiSpa was a key contributor to the outsized revenue growth in 1Q, and we expect continued growth as the product is launched in China this quarter,” the analysts reported in a research note. “Learnings from test markets for the Velocity compensation program appear favorable, helping to align better the interests of sales leaders and the company. Overall, we continue to like [Nu Skin’s] growth strategy, which centers on acquiring and retaining customers, building loyalty programs, introducing ‘accessible’ products, and embracing ‘social selling,’ but see risk/reward as balanced from here.”
The company’s strongest growth markets in Q1 included Mainland China (32% year-over-year increase), EMEA (Europe, Middle East and Africa, 32% year-over-year increase) and the Americas/Pacific region (29% year-over-year increase).
Growth in China reflected continued momentum from Q4 2017, attributed to the launch of LumiSpa. Positive performance in Australia, attributed to the launch of the Velocity sales compensation plan, along with growth of Latin American markets such as Argentina, is driving growth in the Americas/Pacific region. Social selling and product initiatives in many markets contributed to growth in the EMEA region.
Reflecting its positive performance in Q1, Nu Skin increased its revenue guidance by 2.8% (about $70 million) to achieve $2.51 billion to $2.56 billion in revenue in 2018.
"Based on the strength of first-quarter results and our initiatives for the remainder of the year, we are increasing our annual revenue guidance by $70 million," said Ritch Wood, Nu Skin CEO, in a press release announcing the results. "We remain focused on building momentum and executing our customer growth strategy by increasing social sharing capabilities with additional training and tools, driving innovation with ageLOC LumiSpa and other new products, and continuing the roll out of Velocity, our enhanced sales compensation program."