Two major nutrition companies lower projections as growth slows
As the third quarter of 2021 drew to a close, several public direct selling companies made announcements to their shareholders. Both Herbalife and USANA disclosed downward revisions to their 2021 outlooks, while Medifast, Mannatech and Nu Skin announced dividends.
Herbalife Lowers Expectations in Advance of Investor Day
In advance of its 2021 virtual investor day presentation, Herbalife announced on Sept. 13 that it is revising its third-quarter and full-year 2021 projections. The global nutrition company detailed lower than expected sales growth from its distributors despite the number of actively selling independent distributors increasing by 10 percent for the months of July and August compared to 2020.
The anticipated net sales growth for third-quarter 2021 is now 14 percent to 18 percent over third quarter 2019, and full-year growth is now projected to be 19 percent to 23 percent versus full-year 2019.
“The Company has delivered year-over-year growth for the past eight quarters and four straight quarters of year-over-year, double-digit net sales growth,” said John Agwunobi, CEO, Herbalife Nutrition.
“We are on track for another record sales year with a sustained growth trajectory and significant cash generation, positioning us to continue to benefit from the fundamental tailwinds driving the nutrition industry globally and the strong demand for our science-based products, as consumers continue to appreciate the value of good nutrition. Yet, uncertainty in global markets, fueled by the extended period of the pandemic, has brought about unique challenges in predicting behavior in the channel,” Agwunobi advised.
Herbalife ensured investors that it was still on track for a second straight record year with an anticipated net sales growth between 4.5 percent and 8.5 percent for 2021.
Executives presented their plan to drive growth and retention rates at a Sept. 15 investor day. The four-point strategy called for local product innovation, Nutrition Club Expansion, Digital Transformation and Enhanced Brand Trust.
USANA Updates 2021 Guidance and Offers Preview of Q3
On Sept. 16, USANA Health Sciences Inc. announced preliminary third-quarter results as well as a modified outlook for fiscal 2021. The Utah-based nutritional and skincare product company is forecasting Q3 net sales between $265 million and $270 million, down from $299 million in the same period last year. Earnings per share projections are between $1.28 and $1.33, compared to $1.44 during Q3 2020.
Kevin Guest, CEO and chairman of the board at USANA, noted continued operational difficulties arising from lockdowns as well as unfavorable currency exchange rates.
“Our sales results for the third quarter have been softer than we anticipated, largely because of increased disruptions and lockdowns in several of our markets due to the escalation of the COVID-19 pandemic. These disruptions have affected our customers and salesforce and, in some cases, our ability to operate and ship products. In some markets, we have had to postpone or cancel certain planned business events and activities. In other markets, we have delayed the introduction of new product offerings until 2022.
“These collective challenges have made it difficult to generate the level of sales activity we were expecting following the short-term sales incentive program offered in the second quarter. Finally, less favorable currency exchange rates also impacted our results during the third quarter and contributed to our adjusted sales outlook for the remainder of the year.
“As a result of these third quarter developments, we are revising our outlook for 2021. Despite these challenges, we are on track to deliver another record sales year with sales growth in the range of 4% to 6% versus the prior year,” Guest concluded.
USANA’s third quarter ends on Oct. 2, 2021, and official Q3 numbers are expected on Oct. 26.
Companies Approve Share Repurchases
Both USANA and Mannatech announced in September that their boards of directors have approved the repurchase of company shares. USANA increased its authorization to $150 million, including $14 million remaining from the previous authorization.
Mannatech’s board approved a share repurchase of up to $1 million of its outstanding stock. The Texas-based nutritional supplement company posted that the repurchase program will end on Sept. 22, 2022, if $1 million worth of shares is not purchased by then.
Direct Selling Dividends
Three companies recently announced dividends for their shareholders. Medifast Inc. announced a $1.42 quarterly cash dividend to be paid Nov. 8, 2021, for investors on record on Sept. 21, 2021.
Mannatech’s board of directors declared a cash dividend of 20 cents per share payable on Sept. 29, 2021, for investors on record on Sept. 15, 2021.
Nu Skin recently announced a 38-cents-per-share dividend that was paid on Sept. 8, 2021 making a 2.9 percent dividend yield for its investors.
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