Reliable Results

Second-quarter results for the company, reported July 19, blew past Wall Street estimates. Sales increased 22% year-over-year to $82 million. Earnings from operations swelled 31% to $14.7 million. Earnings per share of 48 cents topped analysts’ expectation by two cents.

Analysts say the most important metric for Usana investors to watch is the company’s number of sales associates. It had 104,000 at the time of our last story (up from a year-earlier 77,000). Today it has 125,000. Expect to be offered a job soon by a relative you haven’t spoken with in a while who suddenly calls to talk about fiber. This fall Usana plans to roll out an incentive plan whereby its present associates will be paid to recruit new ones. The company has 1% of sales, or about $3.5 million, earmarked for incentives. Of course, it only spends the money if it achieves the desired result — a marketing setup most drug stores can only envy from afar.

International growth for Usana looks especially promising. Mexico was a strong performer for the company in its second-quarter, with sales growth of 76%. Sales improved significantly in each of the company’s top five markets, by 19% in the U.S., 24% in Canada, 33% in Australia and New Zealand, 21% in Hong Kong and 20% in Japan. Management plans to announce a new market in the fourth quarter. (Mainland China might be a problem; industry watchers say multilevel marketing there is viewed by the government as too, well, multilevel.)

Read the entire article at SmartMoney

Also, read our company overview: Usana Facts, News and Review