Nature's Sunshine: internationally bright, but cloud over US

Related tags Revenue Us

Herbal and vitamins manufacturer Nature's Sunshine has continued
its recent run of success, reporting strongly improved second
quarter figures, though the US market continues to pose more of a
challenge, reports Philippa Nuttall.

For the three months ending 30 June 2004, net sales revenue increased 25.2 percent to $79.6 million, compared to $63.6 million in the same period in 2003. Operating income increased 74.7 percent to $4.8 million, compared to $2.7 million, and net income increased 329 percent, to $4.8 million, in comparison with $1.1 million last year. Diluted earnings per share increased from $0.08 to $0.31.

"We are very pleased with the progress we are making this year,"​ said Douglas Faggioli, who was appointed president and CEO of the company in November 2003. "International sales, and in particular our Synergy division, have been achieving outstanding results."

Synergy Worldwide, whose current operations are principally centered in Asia, has seen its sales soar, with net sales revenue in the second quarter totaling $18.8 million, compared to $1.8 million in the same period last year. Net sales revenue for the six months ending 30 June 2004 was up to $32 million from $3.4 million in 2003.

However, as Faggioli acknowledged, the picture is not quite so rosy in the domestic market. Net sales revenue for the US in the second quarter was - at $34.5 million - down 6.4 percent on last year's results of $36.8 million.

"United States sales have continued to lag, but a new product Thai-Go is showing some very positive signs,"​ said Faggioli.

Recently launched Thai-Go is a liquid nutritional supplement made of a blend of 11 fruits and herbs, and is currently Nature's Sunshine top selling product.

Scott Van Winkle, managing director of Adams Harkness, pointed out that although "direct selling is not a channel that you can extrapolate onto the broader market, Nature's Sunshine has consistently had US problems while nearly every other US supplement player has done well."​ He drew attention to USANA Health Sciences' results, which also came out yesterday, where revenue in the US was up almost 30 percent.

Notwithstanding this slight shadow, the outlook is still much more positive then a year ago, when the company had to survive the resignation of its CEO and saw little in sales growth until the final quarter.

As soon as Faggioli took over the reigns he launched a restructuring program, involving a 5 percent reduction in the company's workforce, which it was hoped would lead to annual savings of between $7.0 and $9.0 million.

The cost saving measure - coupled with international sales success - helped the company's revenue surge during the final quarter of 2003 - though again there was a decline on the home front.

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