Naturade Reports Lower 1Q02 Sales Due to Less Demand inMass Market, Health Food Sectors

Naturade Reports Lower 1Q02 Sales Due to Less Demand inMass Market, Health Food Sectors

IRVINE, Calif.--Naturade Inc. (OTCBB:NRDC) reported May 16 thatfor its second quarter (1Q02), ended March 31, less business from mass marketand health food distribution accounts led to fewer sales for the company.

Sales were down 18.2 percent in 1Q02 compared to the $4.3 million reported in1Q01. Gross margin was relatively flat, coming in at 46.6 percent of sales, andoperating costs dipped slightly to $2.2 million. Net loss for the year widenedslightly to $666,000, or $.06 per share lost, from 1Q01's $637,000, or $.09 pershare lost.

Decreased sales to distribution channels ultimately played a big role in thecompany's lower revenue. Mass market sales were 20 percent below those reportedin the same period last year, although repeat sales from mass market customersincreased 9.3 percent. Naturade attributed the slowdown of sales to fewer newproduct introductions as the company focused on core product lines. Sales tohealth food accounts were off 16.6 percent, reflecting Naturade' decision todiscontinue certain lower volume products.

"Despite our sales slowdown, we remain encouraged by the strength of ourrepeat purchases and increasing consumer takeaway of our market-leading NaturadeTotal Soy line," said Bill Stewart, chief executive officer. "Therevenue decline is almost entirely explained by the non-recurring newdistribution pipeline sales which occurred in 2001." He added that thecompany is combating this sales slump by offering second-half introductions,promotions and product upgrades. In addition, the company's investment partnersare currently identifying external opportunities that can strengthen Naturade'sperformance for the long-term.

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