USANA Paraben-Free Skin Care Line Drives Fourth-Quarter Sales
This article was originally published in The Rose Sheet
Executive Summary
The reformulation of USANA's Sensé line should play a key role in the firm's plan to rapidly acquire personal care market share in 2005, according to USANA execs
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The reformulation of USANA's Sensé line should play a key role in the firm's plan to rapidly acquire personal care market share in 2005, according to USANA execs. Sensé paraben-free personal and skin care products have received a "strong market reception" that has positively impacted sales and earnings, CFO Gilbert Fuller maintained in a recent analyst call. The line drove fourth-quarter sales up 26% to $75 mil., while earnings jumped roughly 34% to $9.1 mil. The direct-seller's year-end sales increased 36% to $272.6 mil. with net earnings up 48% to $30.8 mil. However, delays in getting Sensé products to market have adversely impacted the firm's gross margins. The hold up is "primarily related to our inability to accurately forecast the high demand" for the new offerings, VP-Operations Fred Cooper asserted. The line uses a "unique, patent-pending blend of botanicals, antioxidants, and active ingredients that keep every Sensé product fresh without the need for parabens," according to the Salt Lake City-based firm's 1 Web site. A British study published in January 2004 found high levels of parabens in breast tumor samples and recommended further studies to examine a possible connection between the preservative and cancer (2 (Also see "Methylparaben Accumulation Noted In UK Breast Tumor Study" - HBW Insight, 19 Jan, 2004.), p. 8). However, the EU Scientific Committee on Consumer Products recently concluded evidence does not support a link between breast cancer and paraben-containing cosmetics (3 (Also see "Paraben Link To Breast Cancer Unproven By Data, EU SCCP Says" - HBW Insight, 28 Feb, 2005.), p. 9). President David Wentz said USANA's primary focus in 2005 will be on further penetrating existing markets. "I believe that we are under-penetrated in every market where we currently do business, and have the potential to increase sales with our existing products," he maintained. USANA plans to open one new market by the end of the third quarter, and the firm continues to "evaluate the opportunity for entry into China," the execs said. The company expects 17%-20% sales growth in 2005 to $319 mil.-$327 mil. with earnings growth in the 20%-25% range. In addition to Sensé, USANA markets Natural Toothpaste and a number of dietary supplements. |