How Have They Started?
The first three months of 2013 closed with positive growth performances from four of the “Big-6” and not-so-satisfactory results from the other two. Let’s take a brief look at how Avon, Herbalife, Natura, Nu Skin, Oriflame and Tupperware, world’s largest six public direct selling companies performed during the last quarter.
Avon closed the first quarter with a 4% decrease in total revenue, as compared to the same period of 2012. There is also a decrease of 3% in total units sold. Fragrance category grew by 1%, while personal care, color and skincare declined 3%, 6% and 12%, respectively.
Geographically, Brazil sales was down 2%, UK by 9%, China by 30%, and last but not least, North America by 15%. As the company reports, North America “continues to be challenged by disruption in the field due to redistricting in the U.S., as well as other operational challenges.” In fact, active representatives in North America declined double digits during the quarter. North America Silpada revenue declined 21%, too. Among the regions that posted positive figures were Mexico (6%) and Russia (3%).
In her opening speech at the investors’ call, CEO Sheri McCoy said, “We continue to see signs of stabilization and are making early progress in our cost savings efforts. But there remains a lot of work to be done across our businesses, particularly in the United States.” And looking forward, she added, “2013 is a pivotal year for Avon. The entire organization is working with a sense of urgency, and we are aligned against our strategic framework.”
Herbalife management has all the reasons to be happy after the first quarter. The company’s global sales increase performance was a more-than-satisfactory: 16.6%. Once again, Herbalife’s growth was spread to all regions, including North America. In this region, Herbalife increased its quarterly revenue by 5%.
Herbalife posted some impressive results in volume growth in certain markets like Russia (23% increase), and UK (67% increase). To remind, UK is Herbalife’s oldest market in EMEA region.
During the quarter, Herbalife experienced an 18% increase in its average active sales leaders globally. Growth in the average active sales leaders in several of the company’s key markets were: 24% in China,19% in Brazil, 16% in Korea, 14% in Mexico, and 9% in the U.S.
CEO Michael O. Johnson commented, “We will continue to experience strong business trends, and that 2013 will be another year of record financial performance.”
Natura’s net sales increased roughly 6% during the first three months of 2012. Brazil still generates the big portion of Natura’s revenue (86% in Q1). The growth achieved in markets outside Brazil was 30% during this period.
Natura’s management expressed disappointment with the results. And CEO Alessandro Carlucci said while commenting on company’s performance in Brazil, “This was due to our promotional strategy, which did not prove very effective in motivating our consultants in the first half of the quarter, and to the extended summer period resulting from this year Carnival holiday falling close to January.”
In Brazil, Natura maintains its market leader position in overall CFT industry with a market share of 13.4%.
Of the Big-6, Nu Skin was the one with the highest quarterly growth: 19%. Last quarter, Nu Skin owed almost all of its growth to its “Greater China” region. In fact first-quarter revenue increased by 90% in this region.
Looking into 2013, “Given the positive momentum of the business, we are on track to achieve another record year of revenue and earnings,” says CEO Truman Hunt.
The management reiterates their faith in the weight management line that the company will launch late this year. Again, CEO Hunt said, “We are on track to introduce an ageLOC weight management system this coming fall. We will announce the name and details of this system next week in connection with our annual trip with our global sales leaders. Our new guidance of the year anticipates $350 million to $400 million in sales of the weight management system including the impact of cannibalization of other products, which is typical in connection with new product launches.”
Nu Skin management announced that weight management would be a very large category for them. They also said they had plans to launch additional lines following weight management that would bring even more impact.
Oriflame was the other company that posted a negative growth performance in Q1: -3.8%. The good news from Oriflame was that the number of active consultants was up by 3%.
“After a weak trend during the last six quarters we returned to sales force growth during the first quarter. Several initiatives have been implemented to strengthen our total offering and efficiency such as an improved Success Plan in the CIS and the opening of the new Group Distribution Centre in Moscow – while affecting the profitability short term. We continue facing challenges in Europe, however experience encouraging development in the CIS and rest of the World,” said CEO Magnus Brannstrom.
In fact, CIS and Baltics region continues to be a headache shown by a decrease in sales by 8%. Sales growth in this region has not been positive in any of the last five quarters. This region is so important as it represents more than half of Oriflame’s global volume.
Tupperware’s global sales was up 3.6% in the period. There were some top performers among its markets and Turkey was among them. Tupperware posted an impressive 41% growth in this market. The previous quarter’s performance was also as impressive: 31%
Germany on the other hand, was a disappointment to Tupperware during the last quarter. Sales dropped by 10% in company’s biggest market in Europe. Tupperware had grown in Germany consistently over the past three years every quarter. Management said this was because “the product and promotional package didn’t give the expected results”.
Rick Goings, Chairman and CEO, commented, “I’m pleased that our positive trends in sales and profit growth have continued in 2013… Our ability to increase sales, even in challenging macro-economic environments, continues to illustrate the benefits of being a global portfolio of businesses in emerging and established markets, enabling us to consistently deliver solid top and bottom-line growth.”