USANA Health Sciences, Inc., today announced financial results for the fiscal first quarter, ended April 4, 2009.
Net sales for the first quarter of 2009 decreased by 4.2% to $97.3 million, compared with $101.6 million in the first quarter of the prior year. This decline was primarily due to the negative impact of changes in currency exchange rates, which reduced net sales by approximately $10.4 million, or 9.7% in the first quarter of 2009, compared with the prior year. The number of active Associates, however, increased by 12.2% in the first quarter of 2009. This growth was largely driven by our Asia Pacific region.
Earnings per share during the first quarter of 2009 decreased by one cent to $0.43 per share, compared with $0.44 per share in the first quarter of 2008. This slight decrease was primarily due to lower sales resulting from the negative impact of changes in currency exchange rates, which was offset by a lower number of diluted shares outstanding (a result of share repurchases) and a lower effective tax rate.
Dave Wentz, chief executive officer, said, "Despite the difficult global economic conditions, we were pleased to achieve local currency sales growth in most of our markets during the first quarter. In fact, sales were up over 6% globally when measured in local currency."
During the first quarter of 2009, net sales in North America decreased by 10.2% to $55.9 million, compared with the first quarter of the prior year. This decline was primarily the result of negative changes in currency exchange rates, which decreased net sales in this region by $5.0 million, and lower-than-expected sales in the United States. In local currency, however, sales in Mexico increased by 15.4%, while sales in Canada decreased by 0.4%. Excluding currency changes, net sales in North America during the first quarter decreased by 2.2%, although the number of active Associates in North America increased by 2.1% year-over-year to 97,000.
Net sales in the Asia Pacific region in the first quarter of 2009 increased 5.4% to $41.4 million, compared with $39.3 million during the same period in 2008. Excluding currency changes, net sales in Asia Pacific during the first quarter increased by 19.1%. This increase resulted from higher sales volume due to a 26.1% increase in the number of active Associates to 87,000, compared with 69,000 in the first quarter of the prior year. The growth in the number of active Associates in this region was due primarily to a 64.3% increase in Hong Kong, a 27.3% increase in Malaysia, a 50.0% increase in South Korea, and the addition of 5,000 Associates in the Company's newest market, the Philippines.
"We were pleased to see strong growth in most of our Asia Pacific markets during the first quarter," stated Wentz. "Our primary focus continues to be providing the highest quality products and a rewarding compensation plan to effectively retain and attract new customers. We believe that USANA provides a unique opportunity for part- or full-time income during these difficult economic times."
Today, the Company is updating its financial guidance for the full year 2009. The Company projects consolidated net sales to be between $390 million and $400 million, an approximate decrease of about 7% to 9% in 2009 as a result of the negative impact of currency exchange rates and softer-than-anticipated first quarter results in the United States. The Company anticipates that the negative impact due to changes in currency exchange rates will be as much as $34 million in 2009. The Company does, however, anticipate local currency sales growth in most markets during the year. Earnings per share for 2009 are estimated to be between $1.80 and $1.85, compared with $1.85 for the full year of 2008. The Company anticipates that the negative impact on earnings per share due to changes in currency exchange rates will be as much as $0.35 per share in 2009.
Jeff Yates, chief financial officer, said, "Despite continued pressure from currency exchange rates, our fundamental business drivers remain strong. Indeed, most of our markets continue to grow in local currency. Given the difficult economic environment, however, we will continue to closely manage spending and look for ways to efficiently drive top-line growth."
USANA will hold a conference call and webcast to discuss this announcement with investors on Wednesday, April 29, 2009 at 11:00AM Eastern Time. Investors may listen to the call by accessing USANA's website at http://www.usanahealthsciences.com.
USANA develops and manufactures high quality nutritional, personal care, and weight management products that are sold directly to Preferred Customers and Associates throughout the United States, Canada, Australia, New Zealand, Hong Kong, Japan, Taiwan, South Korea, Singapore, Mexico, Malaysia, the Philippines, the Netherlands, and the United Kingdom. More information on USANA can be found at http://www.usanahealthsciences.com.
This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act and Section 21E of the Securities Exchange Act. Our actual results could differ materially from those projected in these forward-looking statements, which involve a number of risks and uncertainties, including global economic conditions generally, reliance upon our network of independent Associates, the governmental regulation of our products, manufacturing and marketing risks, adverse publicity risks, and risks associated with our international expansion. The contents of this release should be considered in conjunction with the risk factors, warnings, and cautionary statements that are contained in our most recent filings with the Securities and Exchange Commission.