Tuesday, May 12, 2015

USANA Misled Shareholders By Cherry Picking Their Results For Their First Quarter Earnings and 8-K SEC Filing and Neglected To Report Hong Kong's Major Decline

USANA Health Sciences (USNA) misled shareholders in their first quarter earnings on May 5, 2015 by cherry picking those markets with an increase in sales while neglecting to report any information on markets that decreased such as Hong Kong. For example, USANA stated “Net sales in Greater China increased 43.0% year-over-year due to growth in Mainland China. Specifically, local currency sales in Mainland China increased 121% year-over year” What USANA didn't tell you in their earnings release was the fact that Hong Kong sales declined by about $15 million or 63%!

USANA only compared year-over-year results. However, USANA is NOT a seasonal stock. If we look at the earnings result quarter-over-quarter, here is what it would look like: Net Sales in Greater China decreased 2.6% quarter-over-quarter due to a declining market in Hong Kong. Specifically, sales in Hong Kong declined $10.2 million or 54.5% quarter-over-quarter. This was slightly offset by growth in mainland China where sales increased by $7.5 million or 9.8% quarter-over-quarter.

In case you missed it - Hong Kong's decrease outweighs mainland China's increase quarter-over-quarter.

Putting this into perspective and why Hong Kong's numbers are significant:
Q1 2015 Hong Kong sales estimated around $8,529,000
Q1 2013 Hong Kong sales were $41,597,000

Tuesday, May 5, 2015

USANA Will Release Their First Quarter Earnings Report For 2015 and Reveal How Effective The Doctor Oz Show Was For Them.

Today's Q1 2015 earnings release after the markets close will reveal how successful USANA's strategy was to promote their products through the Doctor Oz Show. If there are a couple million viewers watching the show each day and just 1% of them become Preferred Customers, we should see a substantial increase in the number of preferred customers in the United States and in Canada. 20K? 40K? 100K? I don't know. They promote a USANA product every month since January and the earnings report covers three months. If the number of additional preferred customers in the United States quarter over quarter is under 20K, then I would consider the effectiveness of the Dr. Oz Show to be a bust.

Regarding the "Americas and Europe" market, which is where the Doctor Oz Show viewers are allowed to register as preferred customers:

USANA gained only 3000 additional preferred customers quarter over quarter from 60,000 to 63000.
USANA gained only 1000 additional Associates quarter over quarter from 85,000 to 86,000.

This should not go unnoticed by stock analysts and should question USANA during the earnings conference call tomorrow why there was no impact from the popular Doctor Oz Show after showcasing 3 USANA products over the course of 3 months to several million viewers. I believe this revelation is evidence of a product with no demand in the free market at its current selling price, which is the price the associates and preferred customers pay. In other words, if you put USANA products on store shelves nobody would buy it!