Naturade, Inc., Sales Increase 26% in 2nd Quarter 2003; Net Loss Reduced over $425,000 as Gross Margin Increases 5.9%

IRVINE, Calif.--(BUSINESS WIRE)--Aug. 18, 2003--Naturade, Inc. (OTCBB:NRDC), a leading marketer of soy protein products under the brand name Naturade Total Soy(R), today reported net sales of $4,082,684 for the three months ended June 30, 2003, an increase of 26.2% over the same period in 2002, and net sales of $7,948,739 for the six months ended June 30, 2003, up 20.3% over the same period a year ago.

Significant increases in gross margin for both the quarter and the first six months led to large reductions in net loss. Gross margin increased from 39.0% to 45.1% in the second quarter of 2003, yielding a net loss of $234,437, down $425,861 from the same period in 2002. On the strength of an increase in gross margin from 41.6% to 45.6%, net loss for the six months ended June 30 declined $899,813 from the same period last year to $426,296.

Naturade's growth during the second quarter of 2003 and for the first six months of 2003 was evident in all channels of distribution. The growth in the health food channel of 3.8% for the quarter and 6.2% for the six months ended June 30, 2003, reverses several years of declines experienced in this channel. International net sales increased 117.1% for the quarter and 50.1% for the six months ended June 30, 2003, over the same period in 2002, primarily due to increased sales of Naturade Total Soy(R) meal replacements in Canada.

The mass market channel continues to be the volume driver for the Company, increasing to 50.3% of total net sales for the six months ended June 30, 2003, from 43.7% of net sales during the same period in 2002. This is a 38.4% increase in mass market net sales for the first six months of 2003 compared to the same period last year, primarily due to increased turn business and increasing penetration into club stores.

According to Naturade CEO Bill Stewart, "Strategic initiatives begun by Naturade management in the second half of 2002 are showing positive results. Our effort to reposition the Naturade Total Soy(R) brand for weight loss is capitalizing on increasing consumer concerns about obesity and their search for weight management products that are safe and effective."

Stewart continues, "The significant reduction in net loss that we've realized comes from management's focus on reducing costs as we increase sales. Our sales success with Naturade Total Soy(R) is paralleled by our ability to significantly improve gross margin through an intensive reformulation effort that resulted in a significant taste improvement while reducing product costs.

"In addition," he says, "we've trimmed our promotion spending and exited accounts where expenses were out of line with volume. Our focus remains fixed on increasing our penetration into profitable channels of distribution while continuing to improve the bottom line."

Headquartered in Irvine, Calif., Naturade -- since 1926 -- has been committed to marketing innovative natural products to improve the health and well-being of consumers. Well-known for over 50 years of leadership in soy protein, Naturade is the number one brand name of soy protein powders sold in retail stores. Its premier product, Naturade Total Soy(R), is a complete line of ready-to-drink, bars and shake mix meal replacement products for weight loss sold at major supermarkets and drug, health food, club and mass merchandise stores throughout the U.S. and Canada. The Company's other products include Calcium Shake(TM), Naturade Total Soy Menopause Relief(TM), Naturade(R) protein boosters for low carb dieters, Power Shake(R), Quick Fizz(TM) and Aloe Vera 80(R). For more information, visit

NOTE: The Private Securities Litigation Reform Act of 1995 provides a "safe harbor" for certain forward-looking statements. The statements contained in this news release that are not historical facts are forward-looking statements based on the company's current expectations and beliefs concerning future developments and their potential effects on the company, including, without limitation, statements concerning the company's strategies and initiatives to improve business results. There can be no assurance that future developments affecting the company will be those anticipated by the company. Actual results may differ from those projected in the forward-looking statements. These forward-looking statements involve significant risks and uncertainties (some of which are beyond the control of the company) and are subject to change based upon various factors. These factors include the impact of government regulations, less stable demand in the mass market, variability of quarterly earnings, business interruption due to terrorism, ability to continue as a going concern and potential future earnings losses, dependence on key customers, dependence on current and ongoing financing, dilution due to future equity sales, technological changes, dependence on third-party manufacturers, pricing pressures and other competitive factors, dependence on qualified personnel, product liability exposure, inability to identify strategic growth partners, instability of the dietary supplement industry, impact of adverse publicity, limited success of new products, insufficient protection of intellectual property, stock price volatility and close control of company stock. The company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. For a more detailed discussion of some of the ongoing risks and uncertainties of the company's business, see the company's filings with the securities and exchange commission.

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