Oriflame CEO Talks Potential Expansion into U.S., Brazil

Expansion into the United States and Brazil could come in the not-too-distant future for Oriflame, the Swedish cosmetics maker that currently counts Russia as its largest market.

The Swiss company’s CEO, Magnus Brannstrom, who will keynote the DSN Global 100 Celebration in April, told Reuters that Oriflame is looking to enter the two major markets within a few years. In 2014, Brazil was the fifth-largest market for direct sales, according to the latest data from the World Federation of Direct Selling Associations. The market accounted for 7 percent of global revenue, trailing only the U.S. and Asia-Pacific powerhouses China, Japan and Korea.

The focus on new markets comes as Oriflame seeks to recover from turmoil in Russia and Ukraine, another key market. Brannstrom said he is “cautiously optimistic” about 2016, after the company’s mid-February report that local currency sales in the first quarter were up 9 percent from a year earlier. Management last month released fourth-quarter profits that beat expectations and discussed bringing back a dividend in the fourth quarter, after cutting the payout for the past two years.

As the company eyes the U.S. and Brazil, emerging markets will continue to drive growth in the long term, with China or India likely surpassing Russia as Oriflame’s biggest market, said Brannstrom. Turkey and Mexico also are top markets for the company, which sells its beauty products through more than 3 million Consultants worldwide.

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Herbalife Quarterly Results Come in ahead of Expectations

Quarterly results were better than projected at Herbalife Ltd. (HLF—NYSE), the nutrition company reported after the close on Thursday.

The shake and supplement seller, which has spent three years fending off attacks on its business model by hedge fund manager Bill Ackman, posted $1.1 billion in revenue for fourth quarter 2015 and adjusted earnings of $1.19 a share, beating consensus estimates of $1.06 billion and 94 cents a share. Reported earnings fell to $84.5 million, or 98 cents a share, from $103.3 million, or $1.21 a share, a year ago.

Herbalife China continued to drive growth, as quarterly revenue increased 24 percent to $220.4 million. Sales in North America remained flat, while the remainder of Asia Pacific and EMEA dipped 6 percent and 4 percent, respectively. The company reported a 21 percent decline in South and Central America and a 14 percent decline in Mexico.

For the full year, revenue totaled $4.5 billion, down 9.9 percent from 2014. Excluding the impact of currency fluctuations, revenue rose 4.7 percent. Earnings were $3.97 a share on income of $339 million, compared to $309 million, or $3.40 a share, in 2014.

Chairman and CEO Michael O. Johnson said Herbalife in 2015 completed an overhaul of its marketing plan to strengthen the business in the long term. “We successfully navigated the associated short-term challenges, believing that we were making the right changes at the right time, and despite ongoing currency and macroeconomic challenges, we finished the year returning to growth.”

Facing sustained currency headwinds, Herbalife lowered its first-quarter guidance to adjusted EPS of 97 cents to $1.07, undercutting the average estimate of $1.09 by analysts. For the full year, management expects adjusted earnings in the range of $4.05 to $4.50 a share.

Amway Reports Sales of $9.5 Billion in 2015

Photo above: Amway World Headquarters in Ada, Michigan.


Amway Corp. on Wednesday released its 2015 financial results, announcing annual sales of $9.5 billion.

Despite constant-dollar sales growth in 70 percent of Amway’s top 20 markets, revenue fell 12 percent from a year ago, hurt by currency fluctuations and soft sales in China, where the economy experienced its slowest growth in 25 years. The company reported similar trends in 2014, when revenue dropped 8 percent to $10.8 billion—a performance that nevertheless secured Amway the No. 1 spot on the 2015 DSN Global 100, a list of the top direct selling companies in the world.

In 2015, the company’s top 10 markets were China, South Korea, United States, Japan, Thailand, Russia, Taiwan, Malaysia, India and Ukraine. Management also singled out Brazil and Mexico as emerging markets that recorded considerable gains.

“We experienced growth in seven of our top 10 markets, and emerging markets in Latin America and elsewhere continue to perform well,” Chairman Steve Van Andel noted in Amway’s report. “Several markets achieved record sales levels in 2015 with others producing their best performance in some time. An increasingly competitive environment in China and unfavorable currency exchange rates mask a positive year overall for Amway globally.”

Nutrition remains a powerhouse category for the company, accounting for 46 percent of 2015 sales. Amway Nutrilite is the world’s leading brand of vitamin, mineral and dietary supplements, according to research by Euromonitor International, and the company last year expanded the line with BodyKey by Nutrilite, a personalized weight-management program. BodyKey utilizes a genetic test or comprehensive, scientific assessment to provide a tailored plan for managing weight.

Beauty and personal care products accounted for 25 percent of sales, and durable products, such as the company’s eSpring water treatment system and Atmosphere air treatment system, made up another 16 percent. The remaining 13 percent was split between home care products and assorted other offerings.

Last year also marked the culmination of Amway’s three-year manufacturing and R&D expansion. The company has poured $335 million into strengthening its global infrastructure, opening five manufacturing facilities and a major R&D site in 2015 alone. Other investments included new digital tools to help Amway Business Owners showcase products and manage their businesses.

In 2016 and beyond, Amway leadership sees plenty of cause for optimism, particularly in light of its 2015 Global Entrepreneurship Report. The report, based on a survey of 50,000 people in 44 countries, quantifies attitudes about business ownership and the entrepreneurial spirit.  All told, 75 percent of respondents were positive about starting a business, and that number increased to 81 percent among those 35 and younger.

“Globally, more and more people are seeking an opportunity to do something on their own—whether it’s to earn a little extra or for a bigger commitment to earn more,” said Doug DeVos, Amway President and Chairman of the World Federation of Direct Selling Associations. “We’re well positioned to meet that demand with a low-cost, low-risk business opportunity selling world-class products.”

Elken Gears Up for Opening of Philippines Market

Photo: Manila, Philippines.


Leading Malaysian direct selling company Elken is tapping into growth in the Asia Pacific region with its forthcoming entry into the Philippines.

The company coordinated a soft launch in the Philippines in December 2015, hosting public events to introduce its business model and extensive range of products, which number more than 500 across the categories of cosmetics, personal care, wellness, food and beverage, and home care. An organic spirulina supplement and water purification system are among the company’s top-selling products.

The Philippines is one of the fastest-growing direct selling markets in the world, according to research by the World Federation of Direct Selling Associations. From 2011 to 2014, constant dollar revenue from direct sales increased at a compound annual growth rate (CAGR) of 17.6 percent, outpaced only by growth in China and Vietnam.

With the official opening of the Philippines, Elken’s operations will extend to 11 markets, including Malaysia, Singapore, Indonesia, Thailand, Brunei, Hong Kong, India, Vietnam, Cambodia and Taiwan. The company, which has been in business for 20 years, has offices in 30 cities. Elken reported revenue of $233 million in 2013, earning the No. 50 spot on the 2014 DSN Global 100, before declining to participate in the 2015 ranking.

Herbalife Misses Sales Expectations, Raises Outlook

Herbalife Ltd. yielded a profit of $93.6 million in the third quarter, the nutrition company said Tuesday.

The shake and supplement seller reported net income of $1.09 per share, compared to 13 cents per share a year ago. Excluding one-time costs, earnings were $1.28 per share, exceeding management’s guidance of $1.00 to $1.10 and the Zacks Concensus Estimate of $1.07.

Expenses incurred in the quarter included $4.7 million related to regulatory inquiries and $2.8 million spent responding to attacks on the company’s business model.

Third-quarter revenue was $1.1 billion, down 12 percent on a reported basis and up 5 percent in constant currency. Analysts had expected revenue of $1.15 billion. The most significant revenue growth came from China, where constant currency sales spiked 27 percent. The company’s weakest performance came from the Asia Pacific region outside China, which reported a 16 percent revenue decline.

The company provided fourth-quarter earnings guidance of 85 cents to 95 cents per share on an adjusted basis, reflecting an unfavorable currency impact of about 27 cents per share. Excluding currency impact, adjusted earnings are expected to fall within the range of $1.12 to $1.22 per share.

For the full year, the company now expects earnings in the range of $4.65 to $4.75, up from its previous guidance of $4.50 to $4.70.

Shares in Herbalife, up 53 percent this year, fell 2.7 percent in after-market trading on Tuesday.

Amway Opens $13 Million Botanical Research Center in China

Photo: The Amway Botanical Research Center in Wuxi, China.


To facilitate the study of plants integral to Amway’s best-selling Nutrilite supplement line, the company has opened the Amway Botanical Research Center in Wuxi, China.

The $13 million site, which Amway developed over the past two years, comprises a laboratory and large greenhouse built on 84 acres of farmland. In a statement, the Michigan-based company said it will use the site to research soil nutrients, plant physiology, extract quality standards and processes.

Chinese herbal medicines, which use plants and botanicals to promote optimal health and natural balance, were a source of inspiration for Carl Rehnborg, the creator of Amway’s Nutrilite brand of vitamins and dietary supplements.

“The new ABRC is our effort to research and understand botanicals to a greater extent—using the most advanced technology and scientific practices—and integrate the findings into our products,” George Calvert, Chief Supply Chain and R&D Officer, said in a statement.

Amway has acquired 6,400 acres of certified-organic farmland across Brazil, Mexico and the U.S., in addition to its newest site in China. The company spent three years inspecting various sites before selecting the Wuxi location on account of its optimal growing conditions.

Nu Skin Stock Falls as China Troubles Weaken Sales Forecast

Shares of Nu Skin Enterprises hit their lowest price in more than a year on Wednesday after the company slashed its revenue guidance due to foreign-currency issues and lackluster sales in its China region.

In a statement released ahead of Nu Skin’s 2015 Global Convention, management stated that third-quarter revenue will amount to roughly $573 million. The seller of skincare and nutrition products previously projected sales of as much as $620 million. Analysts had set more optimistic predictions, with an average estimate of $622.6 million. One contributor to the downgrade was the strengthening of the U.S. dollar, which created a foreign currency headwind and negatively impacted revenue by more than $60 million compared to the previous year.

After climbing 6.6 percent this year, Nu Skin stock fell as much as 26.9 percent on Wednesday before closing the day down 25.7 percent at $34.62. The company’s expected third-quarter results would represent a year-over-year decrease of approximately 10 percent. For the last quarter, Nu Skin reported revenue of $560 million.

The shortfall also stems from weak sales in China, which accounts for 32 percent of Nu Skin’s total revenue. Lower-than-expected sales of the brand’s new cosmetic oils were a major factor, and may reflect economic conditions in the wider Chinese market, Nu Skin CEO Truman Hunt said in a statement.

“Given the successful launch of ageLOC Youth in South Asia/Pacific, we look forward to the introduction of ageLOC Youth as well as ageLOC Me in most of our regions during the fourth quarter,” said Hunt. “We forecast year-over-year constant-currency revenue growth of between 7 and 10 percent in the fourth quarter.”

In September, Nu Skin promoted one of its Asia executives, Ryan Napierski, to lead the company’s global sales organization. Napierski spent the past eight years in the region, most recently serving as President of both Nu Skin Japan and Nu Skin North Asia. Before transferring to Asia, Napierski helped to advance the brand in Europe as Vice President of European Business Development.

Nu Skin will release its earnings results for the third quarter on Nov. 5.

Direct Selling’s Strength in the World’s Billion Dollar Markets

by Andrea Tortora

Direct selling continues to gain ground worldwide, with global retail sales and the total salesforce both reaching record highs in 2014.

The World Federation of Direct Selling Associations (WFDSA) estimates that retail sales rose 6.4 percent to $182.8 billion in 2014, up from $171.8 billion in 2013, with all regions and three-quarters of direct selling countries posting gains. The total salesforce grew by 3.4 percent in 2014 to 99.7 million people, up from 96.5 million in 2013. All of which lights the stage for coming geographic shifts in market dominance.

“The most recent figures highlight the increasing opportunities that direct selling offers,” says WFDSA Chairman Doug DeVos. “Customers seek personalized service and quality products, and direct sellers are able to meet those needs in a way that is convenient and enjoyable. At the same time, people who aspire to earn a little extra or launch a full-time business venture are drawn to direct selling due to its flexibility and pay-for-performance structure.  It’s exciting to see more people, both customers and distributors, enjoying the benefits of direct selling.”

As part of WFDSA’s annual global statistics gathering, data is collected in local currency figures, which are then converted to U.S. dollars using 2014 exchange rates for all years. When comparisons are made to determine year-over-year change, this practice eliminates the impact of currency fluctuation, explains Judy Jones, Market Research Insights Leader at Amway and Chair of the WFDSA Global Research Committee. The 2015 report comes with an expiration date of May 2016, when the next year’s data will be published. For some markets, sales are estimated until the respective country reports its official figures to the WFDSA. At that time, actual data is restated and accounted for the next year.

These most recent figures confirm direct selling’s strength and its ability to keep reaching more people—as sellers and consumers—in all corners of the globe. The industry’s 6.5 percent three-year compound annual growth rate (CAGR) from 2011 to 2014 is evidence of that power.

The Top 5 countries account for 61 percent of all global sales. All but one report a positive CAGR (2011-2014):

  1. United States, 4.9 percent
  2. China, 18.7 percent
  3. Japan, -2.3 percent
  4. Korea, 8.1 percent
  5. Brazil, 6.7 percent

In all, 23 countries posted retail sales from direct selling of $1 billion or more in 2014. That group accounts for 93 percent of global sales from direct selling.

Leading the pack of the Top 5 countries once again is the United States, where the 2014 sales of $34.5 billion set a record and grew by 5.5 percent from the prior year. The U.S. CAGR for 2011 to 2014 is 4.9 percent. There are 18.2 million people who distribute products, up 8.3 percent from 2013. Nearly 75 percent are women, which means 14 million females are building their own businesses.


Overall estimated retail sales rose 6.4 percent to $182.8 billion in 2014, up from $171.8 billion in 2013.


Companies that are members of the U.S. Direct Selling Association (U.S. DSA) employ 55,300 people who are highly trained experts in their field. For example: 3,000 employees are science professionals, including chemists, biologists and engineers.

“Robust salesforce and revenue figures only tell part of the story behind direct selling’s success in the United States and around the world,” says Joseph N. Mariano, President of the U.S. DSA. “Our channel also provides …

Click here to read the full article in Direct Selling News.

Avon North America Sees Rare Profit in Second Quarter

Sales at Avon Products Inc. (AVP—NYSE) continued to decline in the second quarter, but the beauty company’s lagging North America division posted its first quarterly profit in several years, Avon said Thursday.

Second-quarter revenue fell 17 percent to $1.8 billion, weighed down by currency pressures in several foreign markets. On a constant-dollar basis, overall sales remained flat, with growth in Russia and the Philippines offset by declines in Brazil, China and the U.S.

The New York-based company reported adjusted earnings of 11 cents a share, surpassing the 7 cents predicted by analysts but dropping 20 cents from a year ago.

Heavy cost-cutting initiatives are paying off for the company in North America, where it saw a modest profit for the first time since the first quarter of 2012. Despite an improving bottom line, the number of Avon sellers in North America fell 16 percent from the second quarter of 2014. Overall, the brand’s salesforce shrunk by 2 percent from a year ago.

Avon said its expectations for the full year remain the same. The company forecasted modest constant-dollar revenue growth, with continued negative effects from currency exchange rates.

Nu Skin Looks to China, New Products to Boost Earnings

Photo: Nu Skin’s corporate headquarters in Provo, Utah.


Despite weak first-quarter earnings, Nu Skin Enterprises Inc. is confident that its expanding China business and forthcoming product launches will pay off in the second half of 2015.

Quarterly revenue landed in the middle of the company’s guidance at $543.3 million, a 20 percent drop from $671.1 million a year ago. Excluding one-time costs, earnings were 72 cents a share. Analysts had estimated that earnings would reach 73 cents a share on revenue of $546.87 million.

Nu Skin’s active associate numbers continued to decline in all regions except South Asia/Pacific, where active associates increased 4.3 percent from the prior-year period. Greater China recorded the sharpest decline, down 23 percent from the first three quarters of 2014.

In its earnings call, Nu Skin disclosed that the Securities and Exchange Commission has opened a non-public investigation into a donation the company made in China in 2013. Executives said Nu Skin is cooperating with the investigation, but provided no further details.

President and CEO Truman Hunt said Nu Skin is working to expand its footprint in China despite regulatory challenges, including a review early last year that prompted Nu Skin to halt recruiting and resulted in fines for the company. Hunt noted Chinese officials have granted Nu Skin approval to operate its direct selling business in two new cities in Guangdong province.

The anti-aging brand is counting on new ageLOC offerings to drive constant-currency revenue growth in 2015. “Enthusiasm is building for our upcoming product launches that include ageLOC Youth, our most advanced anti-aging supplement, as well as ageLOC Me, an innovative anti-aging skincare system that enables consumers to personalize a daily regimen based on individual preferences and skincare needs,” said Hunt.

In July, the company will also roll out its Epoch essential oils line across the U.S. and Canada, where Nu Skin introduced the products in April through a limited offering. It will also introduce a sister line, ageLOC Essentials, to its Chinese customers.

Nu Skin reduced its revenue guidance for the full year by about 2 percent and said it expects earnings between $3.65 and $3.75 a share, compared to the $3.94 consensus from analysts.