MLM earnings: Herbalife arresting slide, Nature’s Sunshine growing again, Usana still swooning

The earnings reports for the major multilevel marketers (MLMs) of dietary supplements presented a mixed bag — with Herbalife showing signs of recovery, Nature’s Sunshine beginning to grow again following the pandemic market distortions, and Usana seeing sales continue to retract.

Herbalife’s recent earnings report showed the company starting to turn the corner on a years-long earning slide.

The Los Angeles-based MLM has been on a vigorous restructuring and cost-cutting campaign since CEO Michael Johnson retook the CEO reins after the ouster of former CEO John Agwunobi in October 2022. Herbalife’s yearly revenue fell from $5.8 billion in 2021 to $5.2 billion in 2022 and $5.1 billion in 2023.

In its recent first quarter 2024 earnings release, Herbalife set its guidance for the 2024 full year net sales at $5.06 billion.

Herbalife: Sales slide may be near an end

For the first quarter, Herbalife reported net sales of $1.3 billion, which was up 1% over the same period a year previously. The company said it was the second quarter in a row of year-over-year net sales growth, indicating the momentum of the sales retraction has been arrested.

In an earnings call with analysts, Johnson said Herbalife’s product mix was well positioned to benefit from the large number of consumers who are using GLP-1 weight loss drugs or might be considering using them soon.

Morgan Stanley Research estimates 7% of the U.S. population will be using the drugs by 2035. That translates to as many as 17 million consumers who may not be absorbing sufficient nutrients in their standard diets.

“We continue to believe the best approach for Herbalife is to leverage our distributors' core strength, which is to help meet people make behavioral changes for sustainable results and provide products that complement the GLP-1 users, such as our GLP-1 nutrition companion product combos,” Johnson said during the call. “While we are still in the early stages of the GLP-1 product combo launch, the data we have so far indicates that the products have been successful at attracting new customers.”

Johnson pointed to another hopeful sign: the rollout in additional markets of an integrated online sales platform called Herbalife One that streamlines transactions and helps attract new customers and keep existing ones. Like some other MLMs, Herbalife has stumbled in adapting its operations to completely virtual environment for sales and customer interaction.

A transcript of the call was posted on the site seekingalpha.com.

Despite Herbalife’s narrative, stock traders don’t seem to be buying the story. The company’s share price tumbled 31% after the fourth quarter 2023 earnings were released on May 1, sinking to just over $8 a share. Herbalife’s share price has yet to recover that lost ground, trading at about $11.27 today. The recent high for the stock price was more than $55 a share in June 2021.

Nature’s Sunshine: Returning to growth

In the case of Nature’s Sunshine, which is based in Lehi, Utah, the company reported $111 million in net sales in its first quarter of 2024, which was a 2% year-over-year improvement, or 4% on a constant currency basis.

Nature’s Sunshine’s annual net sales were $444 million in 2021, $422 million in 2022 and $445 million in 2023. The company predicted net sales for 2024 could reach as high as $480 million.

The company’s share price has been relatively stable, trading between $15.50 and $20 in recent years.

Like Herbalife, Nature’s Sunshine has been on a cost-cutting mission. In a statement on its website, the company noted this was more important than ever because inflation has been eating into the bottom line.

“On the cost side of the equation, inflationary pressures and volatile foreign exchange rates have negatively impacted ingredient costs, placing additional pressure on our gross margin expansion efforts in the quarter, but we remain committed to deliver our $10 million cost of goods savings goal. We are also still firmly on our path to driving sustainable profit growth by expanding our ability to attract and retain customers,” the company said.

Usana: Sales contraction expected to continue

For Usana, based in Salt Lake City, the picture is less rosy. The company’s recent quarterly report saw revenue fall to $228 million, an 8% decline over the same period a year previously. 

Usana has been on a steady downward path, which is expected to continue at least through 2024.  The company’s full year revenue was $1.19 billion in 2021, $999 million in 2022 and $921 million in 2023. In its most recent earnings statement, Usana disclosed it expected 2024 full year results to range from $850 million to $921 million.

Usana’s share price took a sharp drop after its results were released on April 30 but has recovered slightly in the days since. The company’s shares are now trading at about $47.50 a share but were trading at more than $100 in early 2022.