Restructuring efforts help Nature’s Sunshine eke out profit amid falling sales

12-Mar-2020 - Last updated on 12-Mar-2020 at 16:30 GMT

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Cost cutting efforts helped network marketing firm Nature’s Sunshine report a profit even as sales fell significantly in most of its markets.

Nature’s Sunshine, a multi level marketing company based in Lehi, UT, released its annual financial results this week. They showed that overall revenue fell by 5.8% in the fourth quarter and 0.7% for the year overall.

Nature’s Sunshine reported $91.7 million in sales in the fourth quarter of 2019 compared to $97.4 million a year previously. For the full year, 2019 sales came in at $362.2 million in 2019 compared to $364.8 million in 2018.

Finding a profit amid falling sales

But CEO Terrence Moorehead said a cost cutting and restructuring effort is bearing fruit. The company reported a slim $1 million profit GAAP net income figure in the fourth quarter as compared to a $2.9 million loss in the fourth quarter of 2018. For the full year, the company recorded a $0.5 million loss compared to a full year 2018 loss of $2.2 million.

“In 2019, we began to strengthen the foundation of our business and restructured $10 million of cost out of the organization. As we move forward, our cost reduction initiatives will continue but we'll also be introducing several strategic initiatives,” Moorhead said in an earnings call with analysts. The call was posted in transcript form on the site seekingalpha.com.

Moorehead said the company will focus on revamping the company’s website and digital sales platforms to “make it easier to do business with us.” The company has struggled with poor online interactivity in the past. A bungled Oracle software upgrade in 2017 significantly hurt profits.

Jumping on the hemp bandwagon

Nature’s Sunshine sells a variety of dietary supplements under its own and the Synergy Worldwide brand names. The company introduced a line of hemp products in the fourth quarter branded as Qemp, or quality hemp, that combine whole spectrum hemp extracts with other herbs and essential oils. Moorehead said the company’s record of quality manufacturing will stand it in good stead in this market sector.

“We were excited to enter the CBD market, and having created a unique and groundbreaking line of products that take CBD to the next level. Our emphasis on traceability and improved sourcing will allow Nature's Sunshine to deliver active compounds that offer better performance, better quality and better transparency,” he said.

Sales fall in Asia, and COVID-19 won't help

Nature’s Sunshine’s net sales fell in Asia, in North America and in Latin America. Sales grew strongly in Europe, driven mostly by good results in Poland and Russia. Moorehead said the COVID-19 crisis is sure to affect the company’s results, but couldn’t be more specific. The company’s office in Singapore only reopened recently and the sector wide conference for distributors that was scheduled to take place this month has been canceled.

Nature’s Sunshine’s share price fell slightly after the earnings announcement. The company’s shares trade at about $7.85 per share today, off from a recent high of $16 in 2016.