Natural Health Trends Corp. Net Sales Rise 242% to Top $38 Million for First Quarter; Net Income Increases to $3.1 Million from $1.4 Million

DALLAS, May 25, 2004 (BUSINESS WIRE) -- Natural Health Trends Corp. (NHLCE) , an international direct-selling company, announced today its financial results for the first quarter ended March 31, 2004.

Net sales were approximately $38.4 million for the first quarter of 2004 compared to approximately $11.2 million for the three months ended March 31, 2003. This 242% increase was primarily attributable to the increased number of active Lexxus distributors (amounting to approximately $17.4 million), primarily in the Hong Kong subsidiary, Lexxus' expansion into new markets including South Korea in the second quarter of 2003 (approximately $1.1 million), sales of new products (approximately $4.7 million) and the shipment of Hong Kong orders in backlog as of December 31, 2003 (approximately $4.0 million).

Gross profit was approximately $30.5 million in the three months ended March 31, 2004 compared with approximately $9.1 million for the same period in 2003. This 234% increase primarily resulted from the increase in gross sales of Lexxus products.

Net income for the first quarter of 2004 was approximately $3.1 million, or $0.53 per fully diluted share, compared to approximately $1.4 million, or $0.28 per fully diluted share, for the first quarter of 2003. This increase is due to significantly larger net sales as well as smaller selling, general and administrative expenses as a percentage of net sales, which were partially offset by larger cost of sales and distributor commissions as a percentage of net sales.

Mark Woodburn, president of Natural Health Trends, said, "I am extremely pleased to be able to report results for the first quarter of 2004 that are comparable to our performance for the entire first nine months of last year and exceed our yearly results for 2002. Our expansion activities into new markets and the addition of more distributors have clearly paid off. However, it should be noted that a substantial portion of our sales increase for the first quarter occurred in our Hong Kong operations where sales are likely to decrease in the second quarter due to adverse publicity aired on television in China during April."

Woodburn also said, "As the first quarter closed, Natural Health Trends bought Marketvision Communications Corp., which is the exclusive developer and service provider of the direct-selling software we have used since mid-2001. This gives us an opportunity to reduce operating costs and retain control of the development of this mission critical software. I expect more of our top-line growth to reach the bottom line because of this transaction." He concluded, "The dramatic growth we have achieved at Natural Health Trends Corp. is the result of an excellent team of distributors selling products that are well-researched and in demand."

Natural Health Trends Corp. is an international direct-selling company operating in more than 30 markets throughout Asia, North America and Eastern Europe. The Company markets premium quality personal care products under the Lexxus brand and markets its nutritional supplement products under the Kaire brand. Additional information can be found on the Company's website,, and management encourages interested parties to register for corporate updates via e-mail on the Company's homepage.

Statements in this press release that are not statements of historical or current fact constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements involve known and unknown risks, uncertainties, and other unknown factors that could cause the actual results of the Company to be materially different from the historical results or from any future results expressed or implied by such forward-looking statements. In addition to statements which explicitly describe such risks and uncertainties, readers are urged to consider statements labeled with the terms "believes," "belief," "expects," "intends," "anticipates," "will," or "plans" to be uncertain and forward-looking. The forward-looking statements contained herein are also subject generally to other risks and uncertainties that are described from time to time in the Company's reports and registration statements filed with the Securities and Exchange Commission.

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