Soaring sales in Asia help Usana deal with the 'Amazonification' of the US market

29-Oct-2018 - Last updated on 30-Oct-2018 at 01:48 GMT

Dietary supplement direct sales company Usana reported a 13.4% rise in sales in its most recent quarter. The increase was driven almost entirely by soaring sales in its Asia-Pacific region.

Usana, which is based in Salt Lake City, UT, markets dietary supplements and personal care products globally via a multi level marketing paradigm. The company has for many years shown greater growth outside the US than it has domestically.

The most recent earnings release for the company’s third quarter of 2018 presents the trend in vivid relief. The company recorded $296.8 million in revenue in the quarter, compared with $261.8 million in the prior-year period.

Asian sales now make up more than 80% of total

But almost all of those sales—and all of the growth—came from the Asia Pacific region, which now accounts for more than 80% of the company’s overall net sales. Usana’s net sales in the Asia Pacific region increased by 20.2% to $239.6 million for the third quarter of 2018. The total number of active Customers in the Asia Pacific region increased by 13.9% year-over-year. Within Asia Pacific, net sales increased:

22.6% in Greater China;
26.7% in North Asia; and
12.3% in the Southeast Asia Pacific region.

At the same time net sales fell 5.1% in the Americas and in Europe to $57.2 million.

In an earnings call with analysts, CEO Kevin Guest responded to a question about whether negative press about the effectiveness of vitamin and mineral dietary supplements had affected domestic sales. Guest said the overall category continues to be strong, and attributed the negative comparable sales to a boost in sales from a 25-year anniversary promotion the company had in the same quarter last year.

‘Amazonification’ of market

But he said the biggest issue the company is dealing with in the domestic market is competition from Amazon. Why go through the trouble of a face-to-face interaction with a Usana sales associate when you can have the products you want delivered straight to your door?

“When we talk about customer experience for us here at Usana and especially in the US, we refer to it as the ‘Amazonification’ of the marketplace and is direct sales catching up with that way that people receive orders and have products delivered. That’s a major focus for us. . . [T]he health category is still a very strong category,” Guest said. The full transcript of the call is posted on the site seekingalpha.com.

Internal investigation

In a press release that accompanied the earnings filing, Usana reiterated that an internal investigation of its Chinese subsidiary called Baby Care Ltd is still ongoing. The investigation has been under way for more than a year and a half, and the company said it has informed the US Securities and Exchange Commission of the progress.