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Acquisitions, new products and a strong Chinese market benefit major direct sellers

By:  Dave Rauf

Primerica 

Primerica reported an uptick in sales and profit during the second quarter of 2023, spurred by growth in its life insurance division and improved results in its senior health business. 

The Georgia-based life insurance and financial services company reported profit of $144.5 million for the quarter, an increase of 13% compared to the period a year ago. Sales were also up 3% to about $688 million. 

CEO ​​Glenn Williams told analysts during a recent earnings call that second quarter results reflect continued and predictable growth in the company’s life insurance division. 

During the quarter, Primerica issued 97,000 new term life policies, up 9% year over year. 

“Growth in our sales force and the appeal of our life insurance products are creating sales momentum despite the continuing financial pressure on middle income households,” Williams said during the call. 

A lucrative part of Primerica’s business—its Investment and Savings Product—reported sales of about $215 million in the period, down 4%. Results in this segment improved, Williams said, as equity market recovery positively impacted client asset values. 

Despite economic uncertainty, Williams said clients remain focused on their long-term investment goals. 

“However, new sales are still under pressure,” he said. “We believe the compounding impact of high inflation over the last few years has slowed middle-income families’ ability to invest for the future.”

Primerica’s senior health business also benefited during the quarter from the “absence of a negative tail revenue adjustment.” Last year, the segment experienced a $5.4 million negative tail adjustment during the second quarter. 

The Numbers 

• Profit: $144.5 million, up 13%
• Revenue: $688.4 million, up 3%

 

Recruiting and Licenses on the Rise

During the quarter, Primerica said it recruited 86,000 new representatives, a 23% increase compared to the second quarter of 2022. And the company said it had more than 12,600 new reps licensed during the quarter, a 10% improvement year over year. The company now has almost 138,000 reps licensed to sell life insurance and is projecting a 3% to 4% increase in its sales force for 2023. 

“It’s all kind of fundamental organic growth that we’re seeing right now,” Williams said. “So we expect recruiting to continue to be strong.”

Nu Skin 

The Utah-based seller of skincare and nutritional products beat Wall Street earnings estimates during the second-quarter but lowered its full-year financial outlook because of economic pressures and soft sales in several key global markets. 

For the quarter, Nu Skin posted sales of $500 million, a year-over-year decrease of 11%, as revenue declined in just about every global region the company sells its products. The lone exception: China, where sales increased by 8% on a constant-currency basis. 

But CEO Ryan Napierski told analysts during a recent earnings call that the company’s growth in China during the quarter was offset by weaker-than-expected sales in other markets. Additionally, recent product launches in the Americas and South Korea performed below expectations. 

In all, a variety of macroeconomic headwinds, Napierski said, are hurting customer sentiment and spending. And aggressive price increases Nu Skin implemented over the past several quarters in markets around the world “has led to sluggish sales channel performance, most notably in developing markets, including Southeast Asia Pacific, Europe and Africa and Latin America,” he said. 

“While we remain confident in the direction and future outcome of our strategy, the persistence of macro headwinds has made the journey more challenging than expected, especially over the past several quarters,” Napierski added. “Nevertheless, we remain committed to our strategic direction.” 

The company reported second-quarter profit of $26.9 million, down 21% compared to the same period a year ago. 

However, Nu Skin officials are encouraged about the second half of 2023. Napierski said there are positive signs—growth of paid affiliates and sales leaders during the second quarter—that point toward “sustained second-half growth.”

Nu Skin said it expects revenue in the range of $500 million to $540 million for the third quarter. 

The company expects full-year revenue to range from $2 billion to $2.08 billion. Earlier this year, Nu Skin projected full-year revenue would be between $2.03 billion and $2.18 billion.

 The Numbers 

• Total Profit: $26.9 million, down 21%
• Total Sales: $500 million, down 11%
• Americas Sales: $107.6 million, 14%
• Europe and Africa Sales: $46.9 million, down 8%
• China Sales: $88.3 million, up 2%
• Southeast Asia/Pacific Sales: $63.7 million, down 32%

 

Smart Beauty Devices 

Nu Skin is betting big on IoT-connected beauty devices. The company launched its first smart beauty device last year—LumiSpa iO—and is now ready to launch its second product in the connected-device segment: the WellSpa iO. 

Napierski told analysts the new device system is scheduled to launch in several markets during the third quarter of this year and is expected to roll out in nearly all markets by the end of 2023. 

The smart device segment is a key part of Nu Skin’s product personalization strategy, offering customized treatment options, intelligent coaching, and skincare routine tracking. The devices are intended to be coupled with the company’s consumer-facing app that offers product personalization, providing Nu Skin with valuable customer data about product usage. 

“With the introduction of this next device, we expect to make steady progress towards our annual goal of 15 percent of revenue coming from connected device systems on our way to the longer-term target of 30 percent of revenue by 2025,” Napierski said. 

Acquisition Finalized

During the second quarter, Nu Skin also completed its acquisition of BeautyBio, a beauty device brand with an omni-channel marketing strategy. 

Through the acquisition, Nu Skin obtained BeautyBio’s patents for products focusing on hydration facial and micro-needling technology—both fast-growing segments in the beauty device market that Nu Skin plans to leverage. 

BeautyBio will continue to operate independently as its own company, Napierski said, but Nu Skin “will look at their IP and we’ll look at opportunities to incorporate some of that technology into our Nu Skin business.”

Herbalife  

Herbalife’s profit declined by 30% during the second quarter as a sales slump continued in the company’s two biggest markets: North America and China. 

The direct selling giant reported net sales totaled $1.6 billion during the quarter, down almost 6%. That included a roughly 12% decline in North America to $303.6 million and 15% decrease in China to $88 million. 

Net income for the second quarter was $59.9 million, down from $86.5 million during the same period a year ago. 

CEO Michael Johnson told analysts during a recent earnings call that the company’s performance improved compared to the first quarter of this year, and that it marked a second consecutive quarter of improved sales. 

“We are building strong momentum and our trends are improving,” he said. “I can confidently say we’re making steady progress.” 

Company officials cited a 10% price increase put in place last year across most global markets for helping bolster sales figures.

Revenue in the company’s Europe/Middle East and Latin America regions was flat during the period, while Asia Pacific was down nearly 6% for the quarter. 

In North America, a key market for the company, Johnson said Herbalife remains “laser-focused” on creating new engagement with customers and distributors through the launch of several new initiatives, some of which will be focused on “healthy active lifestyle activities.”

Herbalife did not release a revenue forecast, but company officials reiterated that they expect to see growth in the fourth quarter of this year based on trends in the market.

The Numbers 

• Total Profit: $60 million, down 30%
• Total Sales: $1.3 billion, down 6%
• North America Sales: $303.6  million, down 11.6%
• Europe and the Middle East Sales: $289 million, FLAT 
• Latin America Sales: $207 million, FLAT 
• Asia Pacific Sales: $425.8 million, down 5.5%
• China Sales: $88 million, down 15%

 

Vegan Product Launch 

Earlier this month, Herbalife launched its first vegan line of supplements for the U.S. market, Herbalife V. 

During the call with analysts, Johnson said the line contains five plant-based products, including protein shakes, a greens booster, and a digestive support and immune support product. 

“I can attest, they all taste great,” Johnson said. 

Herbalife executives said they are hoping the plant-based product line will open the door to a new group of customers and distributors, while also providing an opportunity for existing distributors to expand their business. 

The company already has a vegan line of products in Europe and in parts of the Middle East, Johnson said. He added: “We’ve got an incredible product line here that we’re just super proud of.”

New Chief Strategy Officer 

During the earnings call with analysts, Herbalife also introduced Stephan Gratziani as its new chief strategy officer. 

Gratziani spent 32 years as an independent distributor, selling the company’s products across global markets. He was one of Herbalife’s top three independent contractors in the world last year. 

One of his primary roles will be to create new synergy between the company and its distributors. Johnson called the move  a “game-changer” for Herbalife. 

“He brings a new voice inside the company, the voice of the distributor with valuable field experience,” Johnson said. “In the ever-changing landscape of our business, we want the distributor voice to be even more integral as a part of our company.”

USANA 

USANA Health Sciences reported profit of $17.3 million for the second quarter, and stronger-than-expected sales in China that helped the company beat expectations for the period. 

Overall, the company’s profit for the quarter was down 9%. USANA said sales totaled $238 million during the period, down 10%. 

CEO Jim Brown said USANA saw its active customer counts stabilize during the three-month period, while the company continued to make progress on several long-term strategic initiatives. 

He said second-quarter operating results exceeded expectations. 

“Although we remain in a fluid operating environment that is being influenced by inflationary pressures, we are generally pleased with the net sales and active customer counts and recognize that there is far more work to do to generate growth,” Brown told analysts during a recent earnings call. 

The biggest bright spot for USANA during the period came from Mainland China, where sequential improvements in sales were driven by strong demand from a small market-specific promotion offered during the second quarter. 

Brown said China is still in the process of reopening following COVID-19, and the company expects to see continued improvements in the market, though he cautioned that consumers are still feeling the pinch from inflation.  

“We are pleased with our performance in this market, particularly given the macroeconomic environment. The country continues to reopen, allowing us to hold more in-person meetings and re-engage with our customers in our single largest market,” he said. “We are, however, continuing to see an impact on consumer spending from broader inflationary pressures, which are affecting customer purchasing decisions.” 

USANA also updated its guidance for 2023 to $900 million to $950 million, up from a previous forecast of $875 million to $950 million.

The Numbers 

• Total Profit: $17.3 million, down 9%
• Total Sales: $238 million, down 10%
• Asia Pacific Sales: $193.6 million, down 11%
• China Sales: $128.7 million, down 8.5%
• Americas and Europe Sales: $238.2 million, down 10% 

 

New Global Market 

USANA plans to open up shop in India in late 2023. It will become the company’s 25th global market. 

During the call with analysts, Brown said the new market expansion is several years in the making. 

“India is an exciting and compelling market opportunity,” he said. “I would like to stress that our approach to expanding and growing this market will be intentional and will focus on long-term sustainable growth.”

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Through a formal response, the Canadian DSA voices concerns that proposed fees will have an adverse impact on direct sellers

By:  David Bland

In a significant development that could impact the accessibility and cost of natural health products (NHPs) across Canada, the country’s national health department, Health Canada, has announced a proposed fee aimed at offsetting regulatory costs. Responsible for overseeing various aspects of health standards and wellness policy to ensure public safety, Health Canada unveiled the plan on May 3, revealing its intention to levy a fee on manufacturers and distributors of natural health products as part of an effort to enhance oversight and ensure product safety. The department closed public comments and consultations on the proposal on Aug. 10, 2023, and is working toward an implementation date of April 1, 2025.

While proponents argue that the fee could bolster consumer confidence and quality control, critics express concerns about potential cost burdens on small and medium-sized businesses and how that could impact consumers who rely on these products. Opponents to the new fee also warn that Canadian consumers may order more non-compliant health products from outside Canada.

The House Oversight Committee calls for more FDA action to ensure safe hemp product access

By:  Stephanie Ramirez

“It’s unfortunate that it’s taken this long for Congress to finally get a sit down with the FDA to get the ball really rolling here, but we’ve had a relatively long leash with CBD.” —Nate Farnsworth, Co-owner, Factory6 Inc.

The Subcommittee on Health Care and Financial Services within the Committee on Oversight and Accountability (U.S. House of Representatives) held a hearing in late July, titled “Hemp in the Modern World: The Yearslong Wait for FDA Action,” to examine the failures of the Food and Drug Administration (FDA) to regulate CBD and hemp-derived products. 

The backdrop of this hearing traces back to the pivotal 2018 Farm Bill, which not only ushered in the legality of hemp cultivation and the sale of hemp-derived goods but also affirmed the FDA’s jurisdiction over regulating these products. 

The iconic brand secures an agreement to reduce debt, re-establish financing, and extend deadlines, signaling a potential turnaround

By:  SSN Staf

“I am confident that this agreement provides us with the financial flexibility to continue executing on our near-term turnaround efforts as well as our long-term strategy to create a global omni-channel consumer brand.” —Mariela Matute, Chief Financial Officer, Tupperware

Tupperware, recently presumed dead after announcing earlier this year it might not be able to stay in business, appears to have new life. 

The party plan giant announced in August it had finalized an agreement with its lenders to restructure its debt, narrowly avoiding going bust in the process. 

The deal with its creditors will reduce interest payment obligations by $150 million. Tupperware also secured $21 million in new financing, an extension on the deadline for paying back about $348 million in debt and a reduction in the amount of debt it owes by around $55 million.   

Tupperware shares surged in early August on news of the lending agreement. 

“I am confident that this agreement provides us with the financial flexibility to continue executing on our near-term turnaround efforts as well as our long-term strategy to create a global omni-channel consumer brand,” Chief Financial Officer Mariela Matute said in a statement. “We are committed to making ongoing progress in improving liquidity and strengthening our capital structure. We appreciate the support of our lenders, who share in our strategy, as we move forward.” 

In April, the company announced it was struggling to survive as a sales slump coupled with mounting debt were pushing it to the brink. At the time, the company said in a regulatory filing that “there is substantial doubt about the company’s ability to continue as a going concern due to anticipated non-compliance with financial covenants and inadequate liquidity to fund its operating costs and obligations in the near term.”

Tupperware warned that it could violate obligations in its credit, and that cash flow was a top priority. And for months, the company had been discussing financing options with advisers to avoid shutting down the iconic direct selling brand. 

To help with ongoing debt issues, the company also appointed Brian Fox, a managing director with Alvarez & Marsal’s North American Commercial Restructuring practice in New York, as its chief restructuring officer.  

The company’s recent problems also extended to the New York Stock Exchange, which sent Tupperware two noncompliance notices in the span of three months earlier this year. In June, the NYSE told the company it was in noncompliance because its market capitalization was too low, and that its average closing price of its stock was less than $1 over 30 consecutive trading days. 

The NYSE gave Tupperware 45 days to submit a plan before potentially delisting the company. 

Now, with a new lending deal in place, analysts and investors appear satisfied for the time being, as the company charts its future. 

Share prices started rallying in late July, ahead of the lending deal’s announcement. That was when the company entered meme-stock territory with investors driving the value of Tupperware stock up five-fold before the restructuring deal was announced on Aug. 3. By Aug. 7 the stock had jumped to $5.23 from a 52-week low of 61 cents on July 20. 

Tupperware stock was trading at $2.51 as of Aug. 24. 

Along with its restructuring, Tupperware also announced on Aug. 24 that it had expanded the size of its board of directors to 13. As part of the lending deal, the company agreed to appoint an additional director with restructuring and turnaround experience. 

To fill that role, Tupperware tapped Paul Aronzon, a strategic financial consultant who specializes in corporate reorganizations. He will chair the company’s “Transformation Committee,” which is focused on Tupperware’s restructuring. 

After years of slumping sales, Tupperware seemed to be on track to regain its footing financially. The company, which sells products in over 70 countries through its independent sales force, launched an ambitious three-year turnaround plan in 2020. This included an executive shake-up aimed at rejuvenating its beleaguered brand after years of revenue declines and falling stock prices. 

That same year, Tupperware reported its first year-over-year sales increase in a quarter since 2017, and the company’s stock rallied at the time in response. Things continued to look up, with retail giant Target starting to carry Tupperware products on store shelves in 2022. 

But Tupperware has faced additional challenges in recent financial quarters, as pandemic trends bolstering their sales have softened: More people have returned to restaurants and eating outside the home again. 

In 2022, sales dropped by 18% to $1.3 billion compared to 2021, and the company’s stock price has plummeted 86% since last June. 

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Urban Retreat’s unusual solution

By:  Jenna Lang Warford

“Often we don’t trust our field enough, and sometimes they just need permission. That doesn’t mean they’re going to do it, but when they don’t have permission there’s resistance.” – Shellie Sullivan, Chief Sales Officer, Urban Retreat

The devastating fire that burned Urban Retreat’s distribution center in the U.K.—and all its inventory—to the ground came just 73 days after the launch of business in the U.S. and Canada. (The company had a presence in 25 countries total and a well-established field in the U.K.) In the weeks following, it became clear to the executive team that it would be about six months before the company was operational again. 

Chief Sales Officer Shellie Sullivan, knowing she had field members who were relying on the income they had created with Urban Retreat, made a bold move. “I reached out to a couple of friends of mine in the industry—one in the U.S. and one in Canada—and said, ‘I have this crazy idea. Here’s what I’d like to do. I’d like to have the two of you come in front of my community, and I want you to foster my people. I want to tell them it is okay to work with you.”

This was a particularly bold move because one of those companies, BELLAME, is a direct competitor, vying for the same caliber of consultant. Sullivan was particularly touched by BELLAME’s founder and CEO, Melissa Thompson. “Melissa said, ‘First I’m going to tell you that I am so proud of you. And second, yes, I’m in. I will absolutely do this with you.”

Bonnie Yunt, an executive with Canada’s GelMoment, was also fully on board with the unusual approach.

A Foster System

Sullivan set up a video call with Yunt, Thompson and the field. “On the call I said to the field, ‘These are my friends. I trust them. They have graciously offered to welcome you into their business, knowing full well you may not stay, knowing full well that you might decide to come back to Urban Retreat in six months.”

The response was mixed. “I had consultants that were upset by it because—and it’s a beautiful thing—they love our brand so much and said ‘I can’t put another skincare product in front of my customers.’ I had some that didn’t understand it. But I had many that did. I do know I have one leader who isn’t coming back in September. 

“I knew that was a risk, and I had to be okay with it. Is it challenging sometimes to look at social media and see my people recruiting or promoting another brand? Yes. But we encouraged them to find what they needed to take care of their families for the next six months and let them know that we would welcome them back with open arms no matter what.”

Urban Retreat has an open policy, with no restrictions on who Consultants can represent, a policy many Gen Z and Millennials view as opening stakes when considering companies to partner with, according to research done earlier this year by the Bridgehead Collective. 

Sullivan says, “I think Melissa’s the one that coined the term ‘omni marketing.’ I’m a firm believer in that. Often we don’t trust our field enough, and sometimes they just need permission. That doesn’t mean they’re going to do it, but when they don’t have permission there’s resistance. Omni marketing, having an open policy, removes that resistance.”

Leader Concerns

Not surprisingly, Sullivan encountered leaders who were worried about the risk of partnering with the other companies. “I told them a lot will happen in six months. And you know what the two most likely outcomes are? That they are going to have an experience that doesn’t match up (with Urban Retreat’s), and they’re going to come back, or the other is they go somewhere that’s a perfect match for them, and they make tons of money and they’re super happy. How can you grieve that? How can you be upset over that? Really? Is it sad that you no longer have that person on your team? Sure. But did you just watch somebody thrive?”

Sullivan and her team have been ramping up for the September relaunch, with the distribution center relocated to France, where the manufacturing is. “One of the surprising outcomes that I’m pleased with is the number of consultants who have been so loyal and committed during all of this,” she says. “We kept our Facebook community open and alive. It was kind of quiet and almost eerie when I didn’t have a lot to say in April. Then I began going in every week. And I partnered with Brandon Barber who has been doing a weekly training. Now there’s a consultant every single day doing a live training, and I have a waiting list of consultants that want to train in our group. 

“I’m amazed that there are still a thousand active people in that group. That was my hope and my vision, but I’ve been amazed that it worked and that they’re there and still so excited—some still promoting products that they can’t even sell yet.”

Sullivan adds, “I didn’t have a roadmap here. Figuring out how much to communicate, how much freedom and space to give them, how/what kind of conversations to have; the results of all of that remains to be seen. But from past experience, I’ve learned you always have to follow your gut and your heart, speak up and say what you need to say.”

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Veteran leaders share insight on keeping distributors during tough times

By:  Jenna Lang Warford

“Denying or disregarding the issue at hand only prolongs the crisis.” —Al Bala, CEO and President, Mannatech

Though the U.S. direct selling channel had $40.5 billion in sales in 2022, it seems like every month there is a company facing negative publicity—some from company crises, others from docu-dramas, the Federal Trade Commission, class action lawsuits, or from aspersions cast by Truth in Advertising (TINA), even a groundswell from social media.

Grinding through these reputation management crises can test the mettle of any executive, but by prioritizing several things, an executive team can maintain the confidence of the field as well as its customers. 

Regulators seek to enhance transparency in the digital feedback landscape

By:  David Bland

Following its October 2022 ANPR (Advanced Notice of Proposed Rulemaking) seeking public comment on the proposal of a new rule to regulate deceptive and unfair product reviews and endorsements, the Federal Trade Commission (FTC) has released a much anticipated update to its Endorsement Guides as well as a Notice of Proposed Rulemaking (NPRM) to ban fake reviews and testimonials.

New survey sheds light on gig workers and their evolving roles in the trillion-dollar industry

By:  Stephanie Ramirez

“Pre-Covid, people were saving the money they made from their gigs. Post-Covid, people are using their gig earnings to pay household bills. … If that continues, that’s a major change.” — Dr. Robert Peterson, Professor of Marketing and  Chair of Business Admin., The University of Texas at Austin 

In a comprehensive effort to unravel the intricate dynamics of the gig economy, a new survey sponsored by PayQuicker and the Ultimate Gig Research Project has been released, providing critical insights into the ever-changing world of gig workers in the United States. The research, based on surveys conducted in July 2020 and April 2023, forms an integral part of the extensive Ultimate Gig Research Project, dedicated to empirically assessing gig economy trends to enhance business strategies and inform public policy decisions.