FOR IMMEDIATE RELEASE:
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 |
