Usana, based in Salt Lake City, UT, is a multi-level marketing company that sells dietary supplements, personal care items, and foods. For several years, it has made the bulk of its revenue from Asian markets, with the lion’s share coming from China itself.
Renewed lockdowns and uncertainty in China
Since the start of the year, China has seen a new round of lockdowns as it tries to maintain its zero COVID-19 policy in the face of infections caused by Omicron variants of the virus that have swept the world.
This uncertainty led the company to slightly revise its projections for the full year. The company now expects to bring in between $1.1 and $1.2 billion, figures which in both cases have been reduced by $25 million.
“The operating environment in China has become more difficult and unpredictable due to the escalation of COVID-19 and accompanying lockdowns, restrictions and other disruptions for individuals and businesses. city-wide and the Chinese government has recently begun to implement restrictions in parts of Beijing. At this stage, we do not know if these restrictions will continue to increase in the coming weeks in Beijing and other regions of China that are important to our business,”CEO Kevin Guest said on a conference call with stock analysts. A transcript of the call is available at seekalpha.com.
For the quarter, Usana reported net sales of $272.9 million, down 11% from the same period a year earlier. Of this amount, $218.4 million was recorded in the Asia-Pacific region and $133.7 million in China itself. Net sales in China decreased by 10% compared to the previous year.