March 01, 2016
News in Brief, March 2016
Amway Reports Sales of $9.5 Billion in 2015
Amway Corp. recently released its 2015 financial results, announcing annual sales of $9.5 billion.
Although revenue fell 12 percent from a year ago, hurt by currency fluctuations and soft sales in China, there was constant-dollar sales growth in 70 percent of Amway’s top 20 markets. 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 largest direct selling companies in the world.
“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.”
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.
In 2016 and beyond, Amway leadership sees plenty of cause for optimism, particularly in light of its 2015 Global Entrepreneurship Report. Of the 50,000 people in 44 countries surveyed, 75 percent were positive about starting a business.
“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.”
Ava Anderson Announces Closure, Search for New Ownership
One of direct selling’s promising young companies, Ava Anderson Non Toxic, has undergone a change of name and is pursuing new ownership as the founding family pulls out of the business.
The company now known as Pure Haven Essentials, was founded in 2009 by then 14-year-old Ava Anderson and her mother, Kim, who were on a mission to provide everyday products free of harmful chemicals. New Chief Operating Officer Bob Manny assures customers and representatives of Pure Haven Essentials’ continued commitment to this mission.
“The value of this company is in its more than 10,000 independent Consultants across the U.S. and the hundreds of thousands of their customers, all of whom are passionate about our mission and our products,” explains Manny. “They care deeply about this issue and see education as a priority.”
Ava, the granddaughter of direct sales icon Charlie Collis, Founder of Princess House, had led the company as CEO and Director of Product Development, supported by an executive team that included her mother and father, Frohman, who served as President and Executive Vice President, respectively.
In a statement to customers on the Ava Anderson Non Toxic website, the Andersons said both harassment of Ava and recent business troubles are behind its decision to shutter the company.
The Andersons state, “We withstood the attacks because we felt the message was so dear to us, as well as the tremendous responsibility we have always held for our employees and independent representatives, who have built important incomes through hard work and dedication to their businesses.”
Setbacks in production also took a toll on the family business. Management recently informed Ava Anderson Consultants and customers that a handful of suppliers had violated contractual agreements, adding ingredients banned by the company into several of its 80-plus products. The statement does not disclose whether any of the criticism cited was tied to the company’s manufacturing woes.
While a search for new ownership and a new CEO are underway the management team at Pure Haven Essentials is preparing for the launch of the new brand and initial product offering.
“”We have had issues with a few products from third party suppliers and those have been addressed,” Manny says. “Today is a new day in the life of this important company, for our many employees, independent Consultants and customers.”
Natural Health Trends Reports 113% Annual Sales Growth
Natural Health Trends Corp. (NHTC—NASDAQ) reported record annual sales of $264.9 million, driven by operations in Hong Kong. Sales of the company’s personal-care, wellness and lifestyle products were up 113 percent from 2014, in a second consecutive year of triple-digit percentage growth. Operating income rose 130 percent to $47.9 million. Earnings were $3.82 per share, versus $1.61 a year ago.
Management also addressed a handful of online posts alleging an investigation of the company by the Chinese government. In a Jan. 13 statement, NHTC said its staff attorney and branch manager had met with Beijing Chaoyang District SAIC, the Public Security Bureau and two of the accusers to dispute the claims. As a result, government authorities advised the company that, online rumors notwithstanding, there was insufficient evidence to warrant an investigation of NHTC.
To offset any potential negative impact from the accusations, the company’s board has approved an increase in its ongoing share buyback, raising the ceiling to $70 million. “Their authorization of an additional $55 million for repurchases underscores their confidence. Separately, we are in regular contact with Chinese officials at several government agencies,” said Sharng.
CVSL Sheds Inherited Name, Takes on JRJR Networks
Direct selling conglomerate CVSL has announced it will now operate as JRJR Networks, in what is presumably an allusion to Chairman John P. Rochon and Vice Chairman John P. Rochon Jr., who together own more than 50 percent of CVSL voting stock. The CVSL name carried over when the company was acquired three years ago. When the paperwork is in order, JRJR Networks common stock will trade under the symbol JRJR on the New York Stock Exchange.
Big Brothers Big Sisters Names Nerium Top Corporate Fundraising Partner
|Nerium executives present $1.3 million contribution to Big Brothers Big Sisters.|
In its fourth year backing Big Brothers Big Sisters of America, Nerium International became the organization’s largest corporate fundraising partner. Through its charitable arm, the Nerium Ripple Foundation, the skincare company donated $1.3 million in 2015. All told, Nerium has donated $3.5 million, in both corporate funds and Brand Partner donations, to further the mission of Big Brothers Big Sisters. More than 300 of Nerium’s independent Brand Partners have signed on as volunteer mentors through the organization—including Chief Leadership Officer Renee Olson, who has been a Big Sister for more than two years, and Co-CEO Jeff Dahl, who signed on as a Big Brother soon after joining the company in March 2014.
Silpada Puts New Twist on Business Model with Stylemaker Option
Accessories seller Silpada is rolling out a new program for those looking to earn some extra income without investing the time required to manage a business. Launched in February, Silpada Stylemaker offers a casual alternative to the company’s traditional Representative opportunity. Management said the program targets tech-savvy women interested in adding to, but not necessarily replacing, existing income.
Alongside the program Silpada is introducing the ShopBox, a sales tool in the vein of direct-ship offerings like Birchbox or Stitchfix. Each box contains 15 popular pieces from the company’s collection of handcrafted jewelry and accessories, for the Stylemaker to “wear, share and sell” over a 14-day period. Anything not sold is then returned to the company in the envelope provided.
For an enrollment fee of $129, a Stylemaker receives 25-30 percent commission on all sales, a personalized e-commerce site to share the entire Silpada collection, and the ability to earn $50 referral bonuses. Also included are two ShopBox credits, which the Stylemaker can supplement with additional boxes for $49 each. Silpada said it plans to release six different ShopBoxes throughout the year.
Avon Reports Adjustments in 2015 Reporting for North America Business
As announced on Dec. 17, 2015, Avon Products Inc. (AVP—NYSE) is in the midst of selling off an 80.1 percent stake in its struggling North America business to Cerberus Capital Management, which will privately own and manage the unit. Avon’s earnings report for full-year and quarterly results anticipates that change by designating North America as discontinued operations.
2015 full-year revenue declined 19 percent to $6.2 billion. Full-year revenue for 2014 was adjusted to be $7.65 billion from the revenue previously reported for 2014 at $8.9 billion, which was inclusive of North America. Operating profit for 2015 was $165 million with adjusted operating profit of $352 million. Gross margin was 60.3 percent with operating margin of 2.7 percent.
Loss from continuing operations was $797 million, or $1.81 per diluted share, compared with a loss of $344 million, or 79 cents per share for 2014.
Loss from discontinued operations was $349 million, or a loss of 79 cents per diluted share, compared with a loss of $40 million, or 9 cents per share. During 2015, a charge of $340 million was associated with the estimated loss on the sale of the North America business.
As a result of the above, net loss attributable to Avon for the full year of 2015 was $1.1 billion, or a loss of $2.60 per diluted share, as compared to a loss of $389 million, or a loss of 88 cents per diluted share in the prior year.
In the fourth quarter 2015, revenue from continuing operations fell 20 percent to $1.60 billion. The results reflect a 26 percent drop in Latin America, which accounts for half of total revenue.
EMEA revenue dropped 13 percent to $669.5 million. In Asia Pacific, revenue was down 16 percent, hurt by a 44 percent plunge in constant-dollar sales in China.
The company reported a loss of $333 million, or 76 cents per share, down from a loss of $331 million in the fourth quarter of 2014. On average, analysts had projected earnings of 4 cents per share.
Mary Kay Attracts Increasingly Young, Diverse Salesforce in 2015
“Our unparalleled business opportunity appeals to a wide range of ages and backgrounds, and millennials bring a unique set of talents and expectations. These young women are tech-savvy and digitally connected. They’re looking for flexibility and not a 9-to-5, one-size-fits-all position. A Mary Kay business can be customized to each person’s individual goals and our company’s established social media presence and leading edge digital technology have also proven to be attractive business-building tools.”
— Sara Friedman, Vice President of U.S. Marketing, on the company’s broad appeal
USANA Logs Another Record Year with $918M in Sales
USANA Health Sciences Inc. (USNA—NYSE) announced that revenue neared the billion-dollar mark in 2015, the company’s 13th consecutive year of record sales.
In the fourth quarter, sales of the brand’s health and wellness products totaled $232.6 million, up 2.1 percent from a year ago despite a comparatively strong dollar and a shorter reporting period. Management estimates that these two factors, taken together, shaved $16.5 million from quarterly sales and $53.6 million from annual sales.
In the Americas/Europe region, where revenue fell 6.3 percent to $60.5 million, USANA noted healthy local currency sales growth in both Canada (8.4 percent) and Mexico (13.3 percent). Asia Pacific revenue rose 5.4 percent to $172.1 million, boosted by a 13.5 percent increase in North Asia.
Quarterly earnings were $1.83 per share on income of $24.0 million, up 12.5 percent from Q4 2014. The Salt Lake City-based company also reported 20.6 percent growth in active Associates.
“We finished the year strong and achieved our goal for net sales, despite the significant negative impact from a stronger U.S. dollar and a tough prior year comparable that included an extra week of sales,” Co-CEO Dave Wentz said in a statement.
Full-year revenue rose 16.2 percent to a record $918.5 million, largely driven by sales and Associate growth in the Asia Pacific region. Net income increased 23.5 percent to $94.7 million. The company posted record earnings of $7.18 per share, up 28.2 percent from 2014.