Connect with us on Facebook Follow us on Twitter Join our LinkedIn Group Subscribe to us on YouTube Share with us on Google+ Subscribe to our RSS feed

June 01, 2015

News in Brief

News in Brief, June 2015


Click here to order the June 2015 issue in which this article appeared or click here to download it to your mobile device.


Women’s Wear Daily Beauty Inc Top 100 List Includes 16 DSN Global 100 Companies

Beauty Inc feature design with photography by Kristian Schuller.

Some of the largest players in direct selling are also some of the biggest names in beauty, according to an industry ranking by Women’s Wear Daily (WWD). The fashion, retail and beauty outlet ranked the world’s biggest beauty companies in the latest issue of its Beauty Inc magazine. In terms of profit margin, Tokyo’s Noevir Holdings (No. 68) led the 50 public companies on the list with a margin of 26.2 percent in 2014. Here’s how other direct selling companies are positioned in terms of beauty revenue on the WWD Beauty Inc Top 100.


Reliv Brings LunaRich X Production In-House

Reliv

Reliv International Inc. is taking over the production of its award-winning LunaRich X supplement with the installation of an in-house encapsulation line. The addition to Reliv’s St. Louis-area headquarters will enable the nutrition brand to meet increasing demand—producing more than 48,000 capsules per hour—and ensure quality control of its lunasin supplement, said Chief Operating Officer Brett Hastings. LunaRich X, which helps promote metabolic health, was named 2013 People’s Choice for Favorite New Consumer Product by the American Business Awards.


LifeVantage Names Darren Jensen CEO

Darren JensenDarren Jensen

The search for LifeVantage’s new President and CEO has ended with the appointment of industry veteran Darren Jensen. The nutrition and skincare brand recently announced that Jensen will succeed Douglas Robinson, who resigned in February after a four-year tenure.

“The Board quickly recognized that Darren’s unparalleled track record of success with leading the development and execution of business expansion and sales growth strategies makes him the right leader for LifeVantage,” said Garry Mauro, Chairman of the Board of Directors for LifeVantage, calling Jensen a respected visionary leader within the industry.

Jensen’s 25 years of direct selling experience has included senior roles at several DSN Global 100 companies. He has led development and execution of global sales, product development and service expansion strategies, most recently as President of the Americas and Chief Sales Officer at a fast-growing personal-care and nutrition brand.

“LifeVantage is uniquely positioned as one of the leading product-driven business opportunities available,” Jensen said. “I am honored and delighted to work together with our independent distributors to execute our vision of bringing that opportunity to the world.”

Jensen officially began his new role in mid-May. On May 6, LifeVantage (LFVN—NASDAQ) reported third quarter fiscal year 2015 results. Revenue was $45 million compared to $55 million in the prior year period, though revenue in the Americas increased by 1 percent compared to the prior year period; adjusted EBITDA was $3.3 million, compared to $5.7 million in the prior year period; and the company has identified annual cost structure savings of approximately $4 million.


Tupperware CEO Joins UN Initiative on Gender Equality

Emma WatsonBritish actress and UN Women Goodwill Ambassador Emma Watson joins global leaders to launch the HeForShe IMPACT 10x10x10 Initiative. (UN Women/Celeste Sloman)

Tupperware Brands Corp. Chairman and CEO Rick Goings is calling on his fellow business leaders to take bold, decisive steps toward achieving gender equality throughout their organizations.

Goings addressed women’s economic empowerment in a piece for the Huffington Post, following an announcement that the Tupperware executive will take a leading role in IMPACT 10x10x10, the pilot initiative of UN Women’s HeForShe campaign. IMPACT 10x10x10 is taking a top-down approach to change by enlisting leaders—10 heads of state, 10 CEOs and 10 university presidents—committed to advancing gender equality.

“Business cannot reach its full potential if we do not advocate to unleash the power of women and strive as male leaders to open doors for women to enter into positions of power,” Goings wrote of Tupperware’s role as an IMPACT Champion. “Shackling women’s potential by allowing their talents to be unrecognized, stunted, thwarted and even beat out of them is not a way to grow a society that can thrive.”

Noting that Tupperware’s entire direct selling model focuses on empowering women, who make up the majority of its salesforce, Goings said the kitchenware company will further its efforts by conducting an internal gender audit on its policies, ensuring more women are sponsored by male leaders to reach their full potential, and attaining 50/50 equality in management.


ViSalus Introduces NEON Energy Drink

ViSalus is adding to its portfolio of nutritious, on-the-go snacks with another strategic acquisition. At its recent National Success Training event in Florida, the healthy lifestyle brand announced its entrance into the booming energy drink market with NEON Energy Drink, acquired in a January deal with Altairia Corp.

Energy drinks are a hot commodity, with industry sales of $27.5 billion in 2013, according to market research firm Euromonitor. Global sales skyrocketed 620 percent from 1999 to 2013, and sales of energy drinks are rapidly approaching the level of coffee sales in the U.S.


Medifast Nominates New Directors

Weight-loss company Medifast Inc. has agreed to nominate five new directors as part of an agreement with its third-largest shareholder, activist investor Engaged Capital LLC, which owns approximately 6 percent of the company’s outstanding shares. The board changes include eight existing directors not standing for reelection, reduction of two insiders and the addition of five new directors, along with the appointment of a lead director.

Michael MacDonald, Chairman and CEO of Medifast, said, “We are pleased to strengthen our board slate with the addition of new, highly qualified, independent director nominees, who will add valuable experience and fresh perspective. The entire Medifast team is unified in its focus on achieving the company’s value-building objectives, including further expansion of the Take Shape For Life network and continued product and technology innovation.”

Glenn Welling, Founder and Chief Investment Officer of Engaged Capital, said, “We believe that these important governance enhancements will help drive coach growth, enhance profitability and ensure a shareholder friendly capital allocation discipline. We believe Medifast’s business model and Take Shape For Life are one of the best kept secrets in the weight loss industry.”

Medifast reported its quarterly earnings on May 8. The company reported 46 cents EPS for the quarter, beating the consensus estimate of 35 cents by 11 cents. The company had revenue of $73.30 million for the quarter, compared to the consensus estimate of $71.80 million. During the same quarter in the previous year, the company posted 45 cents in earnings per share. The company’s revenue for the quarter was down 7.6 percent on a year-over-year basis. Medifast updated its Q2 guidance to between 47 cents and 50 cents EPS and its FY15 guidance to $1.85-1.95 EPS.


Shaklee Opens Global Center

Shaklee Innovation CenterShaklee Chairman and CEO Roger Barnett (left) leads a ribbon-cutting ceremony at the Dr. Forest C. Shaklee Global Innovation Center.

Health and wellness brand Shaklee Corp. has announced the official opening of its new Dr. Forest C. Shaklee Global Innovation Center, located near the company’s headquarters in Pleasanton, California.

The state-of-the-art facility will house Shaklee’s entire R&D department, including more than 50 scientists. The center’s namesake, Dr. Shaklee, is the founder of the company and a pioneer in the development of the multivitamin—a foundational product for Shaklee since its creation in 1956. The Global Innovation Center will focus on product innovations, as well as testing and quality control.

In the development of its nutrition, household, and personal-care products, Shaklee has published more than 90 peer-reviewed studies in scientific journals. The company also fosters open innovation by partnering with leading scientists and university programs to discover nutritional trends and technologies.


Nerium Adds First Asia Pacific Market

Nerium International plans to launch its business in South Korea, an up-and-coming anti-aging market, this month. The 4-year-old company, which recently became a member of the U.S. Direct Selling Association, added its first international markets last year with expansions into Canada and Mexico.

Nerium President Roy Truett said a receptive culture and high demand for anti-aging products influenced the company’s decision to enter South Korea. According to a recent report by Transparency Market Research, the global anti-aging market is poised to grow at a compound annual rate of 7.8 percent through 2019. The report indicates that South Korea and a handful of other markets in the Asia Pacific region will soon lead the world in sales of anti-aging products and devices.

Industry veteran BJ Choi will head up Nerium’s new market as Country Manager of South Korea. Choi has accumulated more than 20 years of experience with various direct selling companies in the region.


Silpada Launches New Brand

Silpada

Jewelry maker Silpada Designs is moving into its first new product category with a forthcoming accessories collection. The line of handbags, wallets and scarves will appear in Silpada’s fall catalog, alongside the brand’s signature sterling silver and brass jewelry.

“We’re thrilled to enter a new category and give women even more reasons to feel beautiful,” Co-CEOs Kelsey Perry and Ryane Delka said in the company’s release. “The expansion into accessories is a natural fit that will help us achieve our goals of expanding Silpada’s reach and empowering more women to build lives they deserve.”

Perry and Delka are second-generation leaders of the family-owned business. Silpada’s founders sold the business for $650 million in a July 2010 deal with Avon Products Inc., but bought it back three years later for $85 million as Avon took measures to stabilize its North America business.

The new product offerings are part of Silpada’s strategy to build a family of brands that appeals to both millennials and baby boomers. The company said it plans to expand the accessories line by the end of the year.


Direct Sellers Lend Support to Nepal

Nepal

The country of Nepal, as well as parts of China and India, suffered two massive earthquakes in April and May that resulted in more than 8,000 deaths and destroyed much of the region’s infrastructure. Rapid responses from several direct selling companies have supplied food, water, medical care and emergency shelter throughout the region.

  • The newly established ASEA Advancing Life Foundation donated an initial $10,000 to relief efforts through one of its charitable partners, CHOICE Humanitarian. An additional $20,000 in donations then poured in from ASEA’s employees and associates.
  • The doTERRA Healing Hands Foundation  released an initial donation of $100,000 to deliver desperately needed supplies along the company’s supply chain. The foundation also said that, through the month of May, doTERRA would match all donations up to $500,000 for targeted humanitarian relief.
  • Nail wrap seller Jamberry  introduced a Nepal Relief product in support of UNICEF’s aid efforts. The company donated net proceeds of more than $150,000.
  • The Nu Skin Force for Good Foundation  made an immediate donation of $50,000 to the International Red Cross and solicited further contributions from its sales leaders.
  • On April 29, NYR Organic  donated 10 percent of its sales—more than $15,000—to ActionAid UK and the Disasters Emergency Committee (DEC). Company Chairman Peter Kindersley then matched the donation.
  • The USANA True Health Foundation  made a $50,000 contribution toward immediate aid, such as food and medical kits.
  • Young Living  donated $25,000 to the American Red Cross relief fund and challenged its members and employees to match the gift. Altogether, corporate and member donations topped $100,000.

Arbonne Expands into Sports Nutrition

Arbonne

Arbonne International, LLC has launched its first sports nutrition line called PhytoSport. The collection is designed to deliver a competitive edge to athletes and amateur activity enthusiasts alike. Arbonne’s PhytoSport system is based on three key products to help prepare for physical exertion (Prepare & Endure), then replace electrolytes (Complete Hydration) and recover (After Workout).

“Every aspect of our lives is physical, to some degree,” says Michael D’Arminio, Arbonne Sr. VP & Chief Creative Officer. “When you think about supporting your active lifestyle—from a brief morning jog to an intensive weekend workout—your body needs nutrition for each phase. We developed PhytoSport, Arbonne’s first sports nutrition line, so you can train with the ultimate workout partner, and achieve peak performance.”


Public Direct Sellers Post First Quarter 2015 Results

Twenty-two publicly traded direct selling companies reported quarterly financial results between April 15 to May 15, including USANA, Primerica, Avon, CVSL, Mannatech, Herbalife and Nu Skin.

Among the companies posting good news was Georgia-based Primerica, which reported net income of $43.4 million, or 82 cents a share, on sales of $345.1 million. Revenue rose 6 percent compared to $324.3 million a year ago, boosted by strong sales of Primerica’s term life product. The number of new representatives joining the company rose 10 percent over the prior-year period. “Continued success in executing our organic growth strategy, coupled with our share repurchase program, position us well to continue delivering strong stockholder returns,” said CEO Glenn Williams, who officially stepped into his new role at the beginning of April.

USANA Health Sciences Inc. also was a strong performer, with revenue up 20.3 percent to $219.4 million. The Utah-based company attributed its momentum to a 41.9 percent increase in active associates, concentrated in the Asia Pacific region. Net earnings climbed 19.0 percent to $19.7 million, compared with $16.5 million a year ago. “The first quarter was an excellent start to another promising year for USANA,” said President Kevin Guest. “Our results for the quarter were better than expected, notwithstanding the typical pressure from the Chinese New Year and continued headwinds from a strengthening U.S. dollar.”

WATCHING THE GLOBAL MARKET

International operations proved to be a mixed bag for the direct selling companies reporting financial results this month.

Texas-based Mannatech Inc., for example, continued to build momentum on the strength of its international business, with the strongest performance coming from the Asia Pacific region, where sales increased by 19.5 percent, or $3.7 million, over the prior-year period. Overall, the nutrition and skincare brand reported total revenue of $44.4 million, up 3.3 percent from $43.0 million in the first quarter of 2014. In constant dollars, Mannatech posted 7.4 percent revenue growth. Earnings totaled 40 cents per share, versus 8 cents per share a year ago. “We are pleased that our global teams continue making forward progress on multiple fronts,” said CEO and Chief Science Officer Dr. Robert Sinnott. “Our mandates for this year remain largely the same: to improve our global sales, keep expenses in line, and increase operational efficiency to improve profitability.”

Meanwhile, Utah-based Nu Skin Enterprises Inc. experienced a decline in the number of its active associates 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. Yet, the company is working to expand in China, gaining approval to operate its direct selling business in two new cities in Guangdong Province. In July, the company will 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. 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.

And China proved to be a strong spot for California-based Herbalife Ltd., which reported first-quarter earnings of $78.2 million, or 92 cents a share, beating analyst expectations. Total revenue fell 12 percent to $1.1 billion in the quarter, with a 21 percent increase in sales in China helping to offset a 34 percent decrease in South and Central America and a 9 percent dip in North America.

COMPANIES IN TRANSITION

One of the most closely watched direct selling stocks is that of Avon Products Inc. The company reported quarterly revenue of $1.8 billion, down 18 percent from a year ago and up 1 percent in constant dollars. Excluding some items, earnings were 4 cents a share, a 67 percent decline from last year. Analysts had predicted earnings of 7 cents a share. In the first quarter, Avon’s North America sales declined 18 percent and its number of active representatives declined 17 percent.

Dallas-based CVSL Inc., which reported a first-quarter net loss of $4.9 million on revenue of $19.2 million, is making significant changes in its Longaberger business. Tami Longaberger stepped down as CEO of The Longaberger Company in May, and CVSL also announced that it will stop selling discounted Longaberger product through outlet stores. “Turning around The Longaberger Company is the largest factor in these reported results,” said CVSL Vice Chairman and Chief Financial Officer John Rochon Jr.

“At Longaberger, we spent the first two years solving fundamental problems that we inherited,” he said. “We had to focus on reducing bloated SG&A costs and paying off bank debt to bring Longaberger out of danger. Now we’ve begun turning our attention to stabilizing the revenue line.”