USANA's second quarter earnings will be released Tuesday July 24, 2012 and a follow up conference call will take place on Wednesday at 11:00 AM. I have a few very simple and important questions analysts or shareholders should ask USANA during the conference call for the second quarter earnings release. It is in the best interest of the shareholders that USANA answer the following questions.
1) How much (or percentage) of the distributor incentives was the result of active associates purchasing the minimum requirement every 28 days in order to be commission eligible? (VERY IMPORTANT QUESTION)
2) Of the distributors that USANA considers "Full Time" (Gold Directors and up), ON AVERAGE how much (or percentage) of the commission paid to them comes from preferred customers and how much (or percentage) comes from downline distributors? (VERY IMPORTANT QUESTION)
3) How many active associates and preferred customers are in each of USANA's territories? (Australia, New Zealand, South Korea, Japan, Malaysia, Philippines, Hong Kong, Mainland China, United States, Canada, Mexico, etc...) Please break it down by territory and not region.
4) How many distributors either renewed their distributor membership or purchased a Business Development System (BDS) in the last 12 months? (Will tell shareholders how many TOTAL distributors USANA has)
5) What percentage of USANA's net revenue was the result of product being retailed to customers outside distributor membership program? (If there are no retail sales, then why are associates being lured into the distributorship?)
Questions 1 & 2 are extremely important and shareholders and analysts should demand an answer to them. Its about time USANA explain where the commission comes from that pays tens of millions of dollars to their Full-Time (Gold Directors and up) distributors while leaving the remaining 99% of distributors profitless.
I challenge at least one of these USANA analysts to ask the above questions.
Scott Van Winkle - Canaccord Genuity, Research Division
Rommel T. Dionisio - Wedbush Securities Inc., Research Division
John P. San Marco - Janney Montgomery Scott LLC, Research Division
Frank A. Camma - Sidoti & Company, LLC
Timothy Ramey - D.A. Davidson & Co.
Per Osland (ph) – Jefferies & Company
Mimi Noel - Sidoti & Company
Doug Lane - Jefferies & Company
Diederik Basch – Canaccord Adams
Madeline Miller -- D.A. Davidson & Company
(Updated July 26, 2012)
Of course important questions like the ones I proposed above do not get answered and USANA continues to hide falling distributor numbers in many of their territories. Beginning last quarter, USANA decided to stop disclosing United States, Canada, and Mexico distributor numbers and instead just grouped them all together. Okay, not a big deal. However, USANA now includes their newest territories from EUROPE in the North American distributor numbers. For those that don't know, the United States and Europe are separated by about 3000 miles of ocean. So it is completely irrational for USANA to combine the European segments along with the North American segments because they are so incredibly geographically different. The only reason for USANA to have done this is to mask the continuing dismal distributor numbers in the US and Canada by including a new territory that is expected to have somewhat rapid growth. I call this sleazy and USANA's stock analysts are too blind to have noticed.
If you wanted to take the United States revenue and divide it by the number of active associates for the United States territory, then you can forget it.
