Usana to leverage social media success in China to revive sales in North America

07-May-2018 - Last updated on 07-May-2018 at 15:16 GMT

Usana Health Sciences is planning to use social media platforms to energize its direct selling model in sluggish markets such as North America and Europe.

Usana, which is based in Salt Lake City, UT, recently reported record earnings in the first quarter of 2018. The network marketing company that sells a variety of dieatry supplement and personal care products hit $292 million in revenue, an increase of 14.4% over the same quarter a year previously, a performance that easily bested analysts’ estimates.

The record quarter comes on the heels of a year-end earnings report in which the company passed the $1 billion sales mark for the first time.

For a number of years now, Usana’s best market has been mainland China, where it operates under the name of a subsidiary: BabyCare Ltd. The company has been heavily involved in promotion using the WeChat social network platform, and the effort has paid dividends. Among the earnings highlights were:

Net sales in the Asia Pacific region increased by 19.0% to $232.1 million for the first quarter of 2018. Within Asia Pacific, net sales:

Increased 19.8% in Greater China;
Increased 39.6% in North Asia; and
Increased 11.6% in the Southeast Asia Pacific region.

Sales growth in Greater China was primarily driven by a 4.9% increase in active customers in Mainland China, while sales growth in North Asia resulted from 17.9% active customer growth in South Korea. Sales growth in Southeast Asia Pacific was driven by 27.3% active Customer growth in Malaysia and 18.2% active customer growth in Singapore. The total number of active customers in the Asia Pacific region increased by 5.7% year-over-year.

Getting US sales back on track

But sales in the Americas and Europe were disappointing. Sales in these regions (which the company combines for earnings reporting purposes) for the first quarter of 2018 decreased by 0.6% to $59.9 million, and active customers declined 8.6%.

In order to revive results in North America, which have been sagging for a number of quarters now, CEO Kevin Guest said a social media push will form the core of a strategy to revive sagging North America results.

“We are going to be utilizing WeChat in the United States and other markets, especially for our Chinese communities around the globe. But, yes, Facebook will be a key component, Instagram, other platforms and the notion is ease, and customer experience as to what they become accustomed to just typically in a retail setting to bring that closer to bear in a direct sales setting and not changing the model in any way other than the ease of transaction,” Guest said during an earnings call with analysts.

The call was posted in transcript form on the site seekingalpha.com.