Wednesday, October 26, 2011

USANA's Third Quarter Earnings for 2011 Decline Over Previous Quarter - ARIIX to Blame?


USANA's Third Quarter Earnings for 2011 Decline Over Previous Quarter - ARIIX to Blame? 

Salt Lake City, Utah - October 26, 2011 - Net sales declined by $5,424,000 or 3.6% from the prior quarter. Earnings before income taxes declined $2,245,000 or 10.6% from the prior quarter. Several days ago I released a report showing many distributors leaving USANA to join ARIIX. Several of them were USANA's top distributors. I gave my prediction that associate levels will decline and as a result drop in overall earnings. Seems I was correct.

I'm not sure how USANA can keep a straight face while sending out a press release trying to make their third quarter earnings appear good. I predict this decline to continue due to ARIIX. Many of the USANA distributors that joined ARIIX did so during the third quarter and are still counted in USANA's active associate figures. As a result, active associates in the fourth quarter will likely continue to decline.

It's amazing that even after USANA's "Crazy Cash Contest" where associates receive huge points for recruiting additional distributors and miniscule points for signing up preferred customers, USANA still managed to lose more associates than they can recruit. I've always said USANA's business opportunity is all about selling the dream to make money instead of retailing product to customers, and this contest simply backs up my claims.

I still believe USANA has been violating China's laws by actively recruiting Chinese Nationals into their MLM business opportunity by encouraging them to open the account in Hong Kong. Mainland China has banned MLMs from operating within their country. Remember, Dave Wentz made the following statement last quarter "We definitely have a number of people [Chinese Nationals] who are building in Hong Kong. We do not have a percentage or have a number that we could point to with any accuracy." And then Jim Bramble follows that up with "Well if an individual does not have residency in Hong Kong and the ability to build in Hong Kong, then they can only build in China." So there is clearly something very sneaky going on and I believe analysts need to keep pressing USANA on this issue. I'm not sure how the SEC can continue to turn a blind eye by allowing USANA to continue breaking foreign laws.

The following are charts showing the Active Associate & Preferred Customer trends quarter by quarter. I believe they speak for themselves. The captions describe the result from Q2-2011 to Q3-2011

US Active Associates declined by 2000 or 4%
US Preferred Customers declined by 2000 or 5%

Canada Active Associates declined by 1000 or 4%
Canada Preferred Customers remained flat

Mexico Active Associates remained flat

Mexico Preferred Customers remained flat

SE Asia/Pacific Active Associates increased 4000 or 9%
SE Asia/Pacific Preferred Customers increased 1000 or 17%

Greater China Active Associates declined 9000 or 10%
Greater China Preferred Customers declined 1000 or 12%

N Asia Active Associates remain flat
N Asia Preferred Customers remain flat

Wednesday, October 19, 2011

USANA lost “Major Customers” to ARIIX, which may adversely affect 3rd quarter earnings

USANA states in their own words the following in many of their 10-K SEC filings: My Emphasis in BOLD Red

Major Customers
Sales are made to independent Associates and Preferred Customers.  No single customer has ever accounted for 10% or more of net sales in any fiscal year.  Notwithstanding the foregoing, the nature of our business model results in a significant amount of sales to several different Associate leaders and their downline sales organizations.  Although no single Associate has ever accounted for 10% or more of our net sales, the loss of a key Associate leader or that Associate’s downline sales organization would adversely affect our net sales and our overall operating results.

That is exactly what has and is happening!

Back on May 9, 2011 I reported that four of USANA's top executives (Fred Cooper, Jeff Yates, Mark Wilson, and Riley Timmer ) resigned from their position. However, USANA released this information publicly on May 10, 2011. How did I know 1 day ahead of time? USANA sent out a private memo to all of their Gold director distributors and up. They were privy to insider information before shareholders. However, stock analysts completely dismissed this fact. So when USANA stated in a press release that these executives resigned May 10th, that is not the case according to the May 9th private memo.

Now I'm here to give shareholders heads up on the fact that USANA has lost many of their top distributors who quit their distributorship with USANA to join ARIIX, the multilevel marketing company founded by Fred Cooper and operated by the other three ex-USANA executives who resigned in May. USANA is falling apart and stock analysts covering USANA don't seem to have the shareholders in their best interests.

After some research, I have compiled a list of USANA distributors that have decided to join ARIIX (bottom of this posting). The list is incomplete since neither company publishes who their distributors are (so secretive). Most of the USANA distributor ranking I show below are as of October of 2010. I do not have any recent information of their rankings and USANA has taken great strides at keeping the information a secret.

2 - 5 Star Diamond Director
1 – 4 Star Diamond Director
*1 - 3 Star Diamond Director
2 – Diamond Director
1 – Ruby Director
2 – Gold Director
7 – Silver Director
1 – Bronze Director
1 – Director
2 – Achiever
6 – Builder
4 – Believers
3 – Sharers
*(Revised October 25, 2011: I must at one more 3-Star Diamond Director, Robert & Daryl Allen)

Five Six Diamond Directors are what I would consider KEY ASSOCIATE LEADERS. Many of the others were part of one of these key associate's “sales organization” and left USANA to follow their leader. These key leaders have been plastered all over USANA's website, sales material, training material and all over YouTube promoting USANA's business model and its product. However, these Diamond Directors left USANA even before ARIIX launched, which gaurantees these members key positions in the ARIIX compensation business model. This really says a lot about USANA's products and doesn't bode very well for the company. Also doesn't help that Dr. Ray Strand left USANA to join ARIIX. Recently Liz Strand (Ray's wide) had her USANA distributor page shut down as well.

That's not all. USANA terminated a couple of these key leaders (Lynn Allen Johnson & Duke Tubtim) when they were reported to USANA executives for being on a conference call with ARIIX and other interested individuals who wanted to find out more about ARIIX. Many should be very familiar with a recent 2008 arbitration that awarded an ex-USANA distributor $7,000,000 for being wrongfully terminated back in 2003. Well, now we are talking about a couple star-diamond directors that USANA terminated just a few months ago. So where are stock analysts on this issue?

Now I want to make a little prediction, but first I have to make the following very clear. I have no financial position on USANA's stock or any competitor to USANA. I have never traded USANA stock and never plan to. No one is paying me to write anything about USANA. I am volunteering my time to educate people. I do not like to see people lose their hard earned money because they were deceived or misled.

With that said, I believe USANA's active associate numbers will decline across most of their territories, with China being the exception. If USANA's own SEC filings state that “the loss of a key Associate leader or that Associate’s downline sales organization would adversely affect our net sales and our overall operating results. ” Notice it doesn't use the term “might”,“maybe” or “possibly”. It states it “would” adversely affect their overall operating results

The following is a list I have compiled of USANA distributors who have joined ARIIX.

USANA Distributor #133412 - Lynn Allen Johnson - 5 Star Diamond Director
ARIIX Distributor #10146 - Lynn Allen Johnson - Vision is Power Inc.-

USANA Distributor #2119355 - Duke Tubtim - 5 Star Diamond Director - Millionaire Club
ARIIX Distributor #10198 - Duke Tubtim - Kaizen Support Group Inc. -

USANA Distributor #2111980 - Timothy Lewis - 4 Star Diamond Director - Millionaire Club
ARIIX Distributor #10138 - Timothy Lewis - 4DL Enterprises Inc. -

USANA Distributor #33009 - Robert & Daryl Allen - 3 Star Diamond Director -
ARIIX  Distributor #213647 - Robert Allen -

USANA Distributor #295671 - Steve and Myrna Swartz - Diamond Director - Millionaire Club
ARIIX Distributor # 10168 - Steve Swartz - Have it All, Inc. -

USANA Distributor #3053770 - Iris Lee - Team ASD – Diamond Director -
ARIIX Distributor #10228 - Iris Lee - IS Health Enterprises Ltd. -

USANA Distributor # - Sandy LV - Ruby Director -
ARIIX Distributor #19176 - Sandy LV -

USANA Distributor #2127139 - Tatyana Sutherland - Gold Director -
ARIIX Distributor #11188 - Tatyana Sutherland

USANA Distributor #2765838 - Tracee Gluhaich - Gold Director -
ARIIX Distributor #18696 - Tracee Gluhaich -

USANA Distributor #3216982 - Phyllis Goodman - Silver Director -
ARIIX Distributor #10847 - Phyllis Goodman -

USANA Distributor #2137359 - Glenna and Richard Norris - Silver Director
ARIIX Distributor #59886 - Glenna and Richard Norris, CHHC -

USANA Distributor #3704262 - Randy "Yosef" Katz - Silver Director - Sabai Marketing Group Distributor #10247 - Randy "Yosef" Katz - Sabai -

USANA Distributor #86832 - John & Carol Cliffe - Silver Director
ARIIX Distributor #11327 - John Cliffe -

USANA Distributor#2811720 - David & Monica Rendon - Silver Director -
ARIIX Distributor #42887 - David & Monica Rendon -

USANA Distributor #2554180 - Marlisa Hurt - Silver Director -
ARIIX Distributor #33636 - Marlisa Hurt

USANA Distributor #2320280 - Jean Amicarella - Silver Director
USANA Distributor #3669898 - Jean Amicarella - Sharer (Yes, two USANA IDs with separate websites for this unique distributor)
ARIIX Distributor #17766 - Jean Amicarella -

USANA Distributor #128089 - Larry & Susie Sisson - Bronze Director
ARIIX Distributor #10547 - Larry & Susie Sisson -

USANA Distributor #244097 - Arlene Hutchinson - Director -
ARIIX Distributor #11578 - Ennis Hutchinson -

USANA Distributor #3940012 - Pollawat Pankam - Achiever
ARIIX Distributor #11357 - Pollawat Pankam -

USANA Distributor #2398784 - Maryann Cady - Achiever
ARIIX Distributor #38008 - Maryann Cady -

USANA Distributor #3936760 - Somboon Pongpruk - Builder
ARIIX Distributor #11376 - Somboon Pongpruk -

USANA Distributor #3909038, 4112764 & 4380414 (Builder) - Anh Vongbandith -
ARIIX Distributor #12816 - Anh Vongbandith -

 USANA Distributor #3250998 - Melissa Daniels - Builder
ARIIX Distributor #11496 - Healthy 4 Life, LCC - Melissa Daniels -

USANA Distributor #2479038 - Lucia Sanchez - Builder
ARIIX Distributor #34596 - Lucia Sanchez -

USANA Distributor #4202538 - Ed Walls - Builder -
ARIIX Distributor #15538 - Edward Walls -

USANA Distributor #4086676 - John R. Parke - Builder -
ARIIX Distributor #11507 - John R. Parke

USANA Distributor #4154550 - Rick & Cynthia Evans - Believer
ARIIX Distributor #10896 - Rick & Cynthia Evans -

USANA Distributor #4446386 - Irv Segal - Believer -
ARIIX Distributor #21328  - Irv Segal -

USANA Distributor #4353344 - Loredana Nuñez - Believer
ARIIX Distributor # - Francisco & Loredana Moreno -

USANA Distributor #4387858 - Ric & Carmen Goodson - Believer -
ARIIX Distributor #11387 - Ric & Carmen Goodson -

USANA Distributor #3076606 - Angie Lee - Sharer
ARIIX Distributor #17818 - Angelica Lee -

USANA Distributor #4202828 - Sou Fin Saechao - Sharer -
ARIIX Distributor # - Sou Fin Saechao

USANA Distributor #3914138 - Jidbhong - Jayavasu - Sharer -
ARIIX Distributor #56076 - Dr Jidbhong Jayavasu -

USANA Distributor #7662974 - Edward Williams -
ARIIX Distributor #12996 - Edward Williams -

USANA Distributor #2926598 - Rick Billings -
ARIIX Distributor #10727 - Rick Billings -

USANA Distributor #2812402 - Mike Delevante -
ARIIX Distributor #10817 - Mike Delevante -

USANA Distributor #8297220 - Debbie Turner -
ARIIX Distributor #20916 - Debbie Turner -

USANA Distributor #9638662 - Susan Hamilton -
ARIIX Distributor #34007 - Susan Hamilton, CHHC -

USANA Distributor #9202660 - Chad zinda -
ARIIX Distributor #  - Chad Zinda

USANA Distributor #9613734 - Lyn Clark -
ARIIX Distributor #37967 - Lyn Clark

USANA Distributor #7016988 - Emery Krahn -
ARIIX Distributor #36707 - Emery Krahn -