April 01, 2015
News in Brief, April 2015
Herbalife’s Overhaul of Sales Plan Shows Promise
Herbalife Ltd. (HLF—NYSE) has had a busy year. Though its fourth quarter revenue dropped and 2015 guidance was lowered, the bigger picture shows a company in transition. Throughout the year, the nutritional company has continued to implement significant adjustments across its entire sales channel, retooling it to better accommodate new distributors as they start their businesses. Herbalife is applying this conservative sales approach in an effort to give them more time to qualify for financial incentives, which puts less pressure on them to buy products within a certain time frame.
This “Gold Standard” compensation plan was initiated in Russia in 2008, and has since been expanded to the rest of the world. Improved retention and productivity have already been seen in the China and EMEA markets where these rules are in place. Because the plan is just being introduced in other markets it negatively impacted sales in the U.S., South Korea, Mexico and Brazil in the fourth quarter.
“2014 was a record year in terms of net sales, volume and sales leader retention,” Chairman and CEO Michael O. Johnson stated. “It was also a year of transition, as we continue to implement changes that we believe will create a stronger company with the ideal combination of growth and sustainability.”
For the full year, the company reported net sales of $5.0 billion, a 3 percent increase compared to 2013. Herbalife posted net income of $308.7 million, or $3.40 per diluted share. Adjusted EPS of $5.93 increased by 10 percent versus 2013.
For the fourth quarter, Herbalife beat Wall Street expectations as well as its own consensus when the company reported adjusted earnings of $121 million in the fourth quarter 2014, or $1.41 per share. Consensus estimates for the nutritional company had been $1.16 per share, with Herbalife’s own outlook range being $1.30 to $1.40.
Earnings were overshadowed by a drop in quarterly revenue, which totaled $1.1 billion, down 11 percent from the comparable period a year ago.
The company’s updated 2015 guidance was also lower than anticipated. Herbalife expects a sales decline of 12.5 percent to 15.5 percent in the first quarter 2015, and 6 percent to 9 percent for the year.
Foreign Markets Drive 7% Growth at Mannatech
Nutrition and skincare company Mannatech Inc. posted strong 2014 earnings despite a dip in fourth quarter sales brought on by currency issues.
The Dallas-based company (MTEX—NASDAQ), which ties its business to fighting childhood malnutrition through the Mission 5 Million (M5M) program, reported revenue for the full year was $190.1 million, a 7.1 percent increase from 2013. Mannatech’s Asia Pacific revenue climbed 15.1 percent to $92.4 million. Net income totaled $6.5 million, up from $3.2 million in 2013 to $2.40 per diluted share. The company reported a net deferral of $4.2 million in revenue connected to its loyalty program.
In 2014, Mannatech also carried out its mission of social entrepreneurship through the M5M program. For every automatic product order, the company donates PhytoBlend—a nutrient-packed powder that can supplement any food—to orphanages and relief organizations around the globe. Mannatech has disclosed that its 2014 donations totaled 20 million servings of PhytoBlend to children in need. The company formed the nonprofit M5M Foundation in November 2014 to facilitate its expanding charitable efforts.
Revenue for the fourth quarter was $45.2 million, down 2.8 percent from the same period in 2013. In constant dollars, revenue increased 0.6 percent. Net income for the quarter totaled $1.9 million, or 68 cents per diluted share, compared to 94 cents a share in fourth quarter of 2013.
Mannatech’s business outside North America accounted for a growing share of the company’s consolidated net sales. Both in the quarter and the full year, operations outside North America generated 57.5 percent of sales, up nearly 4 percent from 2013.
Fortune Ranks Tupperware among World’s Most Admired Companies
Tupperware Brands has once again landed on Fortune’s annual ranking of the World’s Most Admired Companies. The global brand has now spent eight consecutive years on the list, where it falls under the Home Equipment, Furnishings category.
To compile its report card on corporate reputation, Fortune ranks nine key attributes such as use of corporate assets, social responsibility and long-term investment value. Tupperware ranked highest in its category for global competitiveness, and second for innovation and use of corporate assets. The company markets its kitchenware, beauty and personal-care products through an independent salesforce of 2.9 million in nearly 100 countries.
“The strength of our mission and our people propels us as a company to continue our success,” Rick Goings, Chairman and CEO, said of Tupperware’s work to empower and support women. “Global competitiveness is one of the priorities of the business, along with the other categories the list is derived from, and we are honored to be ranked on the World’s Most Admired Companies list for the eighth year in a row.”
As an extension of its business model, Tupperware aims to impact lives through opportunity, support and relationships—a philosophy embodied in its Chain of Confidence program. Goings and his wife, Susan, Global Ambassador for the program, recently accepted the Sewall-Belmont House & Museum’s Voice for Women Award in recognition of their work. Goings also represents Tupperware on U.N. Women’s Private Sector Leadership Advisory Council, an initiative focused on economic and political advancement for women.
Oriflame Consolidates Russia Operations in New Production Plant
Oriflame Cosmetics S.A. has completed another step toward streamlining its Russia business with the inauguration of a new production facility in Noginsk. The Swedish beauty and hygiene products group sold its production site in Krasnogorsk to consolidate operations in the turbulent market. The new facility dovetails with Oriflame’s strategy to focus and simplify its business amid geopolitical tensions in Russia and Ukraine.
The $170-million complex, including production facilities, warehousing and a LEED-certified distribution center, enables Oriflame to cut down on lead times and prices in Russia, where it draws a third of its business. The company has scrambled to increase prices in the region, and it anticipates further increases this year as the devaluation of the ruble continues to impact its core business. Oriflame is countering economic uncertainties by focusing on leadership development, introducing a retooled compensation plan and ramping up promotion of its skincare and wellness offerings, particularly the brand’s daily skincare regimen and product sets.
Wellness International Network Unveils New Name and Product Offerings
A major transition is underway at Plano, Texas-based Wellness International Network. The 23-year-old nutrition company is moving to new offices and relaunching under the WIN Worldwide brand, which will feature all-new products and a revised business model.
The husband and wife team of Ralph and Cathy Oats founded WIN in 1992, six years after they took up direct sales to earn an extra $100 in weekly income. Now, a second generation of Oats family members fills key marketing and operations roles within the company.
“For any company to remain successful it must be open to change, and WIN is no exception,” Ralph Oats told DSN in an email. “We realized it was time to launch a more contemporary business model. We are committed to innovations and changes that will grow WIN.”
WIN’s existing business plan and product line is rolling over to a new company, Physician’s Health & Diet (PHD) Program LLC, which will transition away from multilevel marketing. Its product distribution will remain focused on the physician-oriented market. With WIN’s relaunch, leadership aims to carve out a new niche in the industry and build “a multi-level marketing company that offers products and opportunity for anyone, anywhere, anytime,” said Director of Marketing Sheri Matthews.
WIN has made a “financial commitment to innovate,” in Matthews’ words, that extends to every part of the business. The company has developed a new product line which includes WIN Daily Lift, a powdered-drink mix that contains 59 superfoods. For brand partners, WIN has developed simple, action-oriented tools such as a new launch kit, a program that enables customers to earn free product, fresh marketing materials, product sampling options, and an improved online shopping cart and back office. The company is also introducing a new compensation plan that incorporates weekly payments, bonus pools, promotional iPads and a luxury car program.
“We view our WIN family as our No. 1 asset, and we do everything we can to help ensure they are positioned for success,” said Founder Cathy Oats. “We believe our latest innovations will help to ensure WIN continues to prosper for decades to come.”
To develop its new branding and distributor tools, WIN engaged DSN parent company SUCCESS Partners, a producer of marketing tools, videos and personal development materials for the direct sales industry as well as the publisher of SUCCESS magazine and Success from Home. The collaboration produced not only a fresh look and feel for WIN, but also a buyer for the company’s existing headquarters facility. SUCCESS Partners has purchased the 81,000-square-foot building with plans to relocate its own corporate headquarters from nearby Lake Dallas, Texas.
WIN has found a new home in Plano’s 2220-acre Legacy Development, neighboring prominent corporations such as Dr Pepper/Snapple, Frito Lay, JC Penney and Toyota. The company plans to hold a grand opening celebration in June 2015 after occupying its new space.
China Gives Morinda the Green Light on Direct Selling
Morinda Inc. is the latest company to secure a direct selling license from China’s Ministry of Commerce, which has issued just 48 licenses since the country lifted its direct-selling ban in 2005. Morinda plans to market its juice blends and TruAge nutrition products in the city of Chongqing, a hub of over 32 million people, as it awaits additional permits.
“We’ve spent several years and a lot of effort pursuing this license,” said Morinda President John Wadsworth. “This is an expression of our commitment to the future of Morinda.”
Though China is the industry’s fastest-growing market—accounting for $27.3 billion in 2013 retail sales—the country’s narrow regulations have posed challenges to many companies within the industry. In the same year, only eight new companies received approval to launch direct selling operations.
Since launching in 2003, Morinda’s Chinese subsidiary, Tahitian Noni Beverages (China) Ltd., has established offices in nine cities across the country. The company also opened its own GMP (Good Manufacturing Practice) plant in Chongqing in July 2014.
Mary Kay Renews Sponsorship of Dating Abuse Helpline
|Crayton Webb (left), Vice President Corporate Communications and Corporate Social Responsibility for Mary Kay Inc., and Katie Ray-Jones, CEO for the National Domestic Violence Hotline. (PRNewsFoto/Mary Kay)|
At Mary Kay, empowering women is about much more than lipstick and pink Cadillacs. Through its Don’t Look Away campaign, the global cosmetics brand has become a strong advocate for victims of domestic violence, including the one in three teens who experience dating abuse. Following a three-year partnership with text-for-help service loveisrespect, Mary Kay has announced plans to sponsor the helpline for another three years through an additional $1.25 million grant.
“Mary Kay has long been a leader in working to end dating abuse in our communities, and we are thrilled about the continuation of our partnership,” National Domestic Violence Hotline CEO Katie Ray-Jones shared in a statement. “This gift will help provide critical resources to teens and young adults and ensure that someone is always available when a young person is ready to reach out for help.”
Break the Cycle and the National Dating Abuse Helpline launched loveisrespect.org as a tool for young people, with extensive information regarding dating abuse, as well as chat, text and phone crisis services. Since Mary Kay signed on as lead sponsor in 2012, the number of communications received over the helpline has increased by 48 percent. In 2014 alone, loveisrespect responded to nearly 56,000 texts, online chats and phone calls from across the nation.
Nu Skin to Launch Essential Oils Line
Nutrition and skincare company Nu Skin Enterprises Inc. has announced plans to introduce a new line of essential oils in its U.S., Canada and Latin America markets this month. The Utah-based brand will launch Epoch Essential Oils through a sales promotion available to qualifying distributors on Thursday, April 9.
The initial Epoch offering will consist of three single oils and five oil blends, which the company plans to introduce as a package, along with a diffuser, a mini diffuser and topical blending oil. Nu Skin says it will begin selling individual products in July and, later in 2015, introduce the line in China and Europe.
Essential oils, used topically or aromatically, are gaining popularity as natural alternatives to pharmaceutical drugs and antibiotics. In the past five years essential oil manufacturing in the U.S. has grown 3.5 percent annually to $1 billion in revenue, according to a recent report by IBISWorld. Nu Skin CEO Truman Hunt said the brand is looking to differentiate itself from competitors by “applying Nu Skin scientific rigor” to the category.
Epoch product sales will contribute to improving the lives of children through the Nu Skin Force for Good Foundation, which supports humanitarian projects in more than 50 countries. The company has pledged to donate 25 cents from each sale to the foundation’s efforts to alleviate disease, illiteracy and poverty.
Nature’s Sunshine Posts Flat Earnings, Launches New Research Center
Nature’s Sunshine Products Inc. (NATR—NASDAQ) is taking its annual and fourth quarter financial results in stride with its forthcoming entry into China and the launch of a multimillion-dollar research center. The company reported full-year revenue of $366.4 million, down 0.9 percent from 2013, or a 0.5 percent decrease in local currencies. Operating income also fell 19.2 percent to $19.0 million, compared to $23.6 million in 2013. In November, Nature’s Sunshine pulled out of Venezuela due to economic uncertainties stemming from import controls and inflation.
Still the supplement firm is forging ahead with its plan to enter China in 2015 through a joint venture with Fosun Pharma, which accounted for $2.2 million in startup costs.
The company’s nutrition and personal-care products generated $86.7 million in fourth quarter revenue. Earnings were 5 cents per share, coming in 18 cents below the consensus estimate of 23 cents a share.
Like many companies operating in Russia and Eastern Europe, Nature’s Sunshine felt the adverse effects of an increasingly strong dollar underscored by geopolitical challenges in the region. Strong sales in Korea, Japan and Europe boosted the company’s Synergy WorldWide subsidiary, which accounted for $30.8 million in quarterly revenue, an increase of 8.3 percent over the prior-year period.
Nature’s Sunshine followed up its earnings report with the grand opening of the Hughes Center for Research and Innovation, a new state-of-the-art facility located at its corporate headquarters in Lehi, Utah. Utah Gov. Gary Herbert was on hand to officially open the 5,400-square-foot center, where the Nature’s Sunshine R&D team will research how nutritional supplements interact with the body at the molecular level. The center’s research will combat health trends driven by diet and lifestyle choices through natural, nutritionally therapeutic products, said Chairman and CEO Gregory Probert. The new facility features labs and clinical space, as well as exam rooms for consultations and clinical studies.
CAbi Expands Partnership with Opportunity International
Los Angeles-based apparel company CAbi has expanded its partnership with the nonprofit microfinance organization Opportunity International. The new initiative, Women Entrepreneurs are CAbi, or W.E. are CAbi, will make a donation to Opportunity International in the name of each new consultant who joins the company. Opportunity International will use the money to fund small business loans and training programs for female entrepreneurs in developing countries.
Based in Illinois, Opportunity International works in 22 countries providing access to savings, small business loans, insurance, training and entrepreneurial support to more than 5 million people working their way out of poverty. The organization’s Board of Advisors includes The Pampered Chef Founder Doris Christopher. Since 2008, CAbi has raised $615,000 for Opportunity International through a program that allows customers to round their order amount to the nearest dollar and donate the change. CAbi says its goal is to reach more than $4 million in total giving by 2020.
Clothing designer Carol Anderson and 11 co-founders launched CAbi (Carol Anderson by invitation) in 2002. In 2012, investment firms J.H. Whitney and Irving Place Capital took equity stakes in the company. The following year, the company tapped Lynne Coté, a retail executive whose experience has included Jones New York, Anne Klein and Nine West, as CEO.