USANA Second Quarter 2011 Earnings Results Reveal Stagnant Distributor Base

USANA Health Sciences, Inc (USNA) released their second quarter financial statement on July 26, 2011 and they still can't seem to grow in the United States, Canada, Mexico, Australia, New Zealand, Japan, or Malaysia. In fact, USANA seems to be relying primarily on Hong Kong and mainland China. We have heard USANA's excuse for the lack of distributors for several quarters now, which is to blame the bad economy. However, if you read much about the MLM industry, it is said that the industry benefits from a down economy because people need jobs and are more likely to join companies like USANA. If you look at Herbalife (HLF), you'll see that they have been "increasing" their distributor base in North America and Mexico. So what is USANA's problem? Is the pyramid scheme becoming more clear in the eyes of potential recruits? Is it the fact distributors are unable to retail the product for more than their cost since it is over priced and preferred customers get it at the same price as distributors?

We'll soon listen to USANA's 2nd quarter conference call in the coming hours and doubt anything relevant will be mentioned by USANA. Maybe I will be surprised! I think the following question should be asked by stock analysts during the conference call:

ANALYSTS, ASK THIS DURING CONFERENCE CALL:

USANA, is it true you terminated Lynn Allen Johnson & Duke Tubtim (Both are 5 star diamond directors) because they showed an interest in ARIIX (company started by former USANA president Fred Cooper). What about Steve Swartz & Tim Lewis (Diamond and 4 star diamond directors), were they "terminated" as well? All four of these members are now active members in ARIIX; have additional USANA distributors joined ARIIX following the ex-USANA leaders? Do you expect lower distributor figures for the United States in the third quarter as a result of ARIIX? And most importantly, do you expect these former USANA leaders mentioned above to sue USANA because they were terminated? How is this distributor termination any different than the one where USANA was forced to pay $7,000,000 to TWO distributors for wrongful termination?

I will be disappointed if analysts never mention the termination of their top distributors because investors should be made aware of this.

	2010-Q2	2010-Q3	2010-Q4	2011-Q1	2011-Q2
ACTIVE ASSOCIATES
United States	57000	55000	51000	49000	49000
Canada	26000	25000	24000	24000	24000
Mexico	12000	11000	11000	10000	10000
SE Asia Pacific	44000	46000	41000	40000	43000
Greater China	63000	89000	93000	82000	87000
North Asia	8000	8000	8000	8000	9000
ACTIVE PREFERRED CUSTOMERS
United States	39000	37000	36000	38000	37000
Canada	15000	14000	14000	14000	13000
Mexico	3000	3000	4000	3000	3000
SE Asia Pacific	6000	7000	6000	6000	6000
Greater China	2000	12000	16000	8000	8000
North Asia	1000	1000	1000	1000	1000