Question-and-Answer Session
Operator
(Operator Instructions) Your first question comes from the line of Douglas M. Lane - Jefferies and Company.
Douglas M. Lane - Jefferies and Company
Can you give us a feel for the associate incentives line which was up a little bit? Is that kind of a going run rate now, or is there something coming down the pipe that might alter that in future quarters this year?
Fred Cooper
Actually it has increased a little bit due to the elite bonus and the matching bonus, but that line, you wouldn’t expect to see that continued increase as compared to total sales. It’s going to flatten out.
Douglas M. Lane - Jefferies and Company
So it’ll still be up year over year, but probably consistent with the first quarter as a percent of sales?
Fred Cooper
Yes.
Douglas M. Lane - Jefferies and Company
You mentioned the sequential decline, particularly in North America where it seemed to be the impactful. What specifically do you think are you going to put in place to try to reverse that, and do you think that’s something that can happen as soon as this quarter?
Mark Wilson
One of the things we’re learning is as Fred talked about the Philippines opening, we had a number of our top leaders spend all of December, the majority of January, and even into February—some are just now returning home, that certainly played an impact when some of your top income earners worldwide are from the US, and I believe I had about 7 of them US alone that spent a significant amount of time over there in looking at the opportunity. As they return home, I think that obviously is going to give us that impact and leadership back in the US again. We also have been doing a lot of training on these new compensation plan enhancements. As easy as we try to make them, any time you do a change to this many people, it takes time for them to really understand and grasp the power of what we’ve done, so we’ve been spending a lot of time on that, and I think as people are starting to grasping this, you’re going to see that continued enrolment trend as well as the strength of the overall growth in the US start to rebound a little more. We’re seeing some very optimistic things. We just completed a regional in San Antonio, Texas, where we saw a number of guests there. That was positive, and the trend will head in that direction. The other thing is we’re starting to attract other potential leaders, big leaders, that are looking at USANA for the first time with these enhancements, that I think we’re now appealing to them, and we’ve entertained several of these already, and I think that’s going to result in some positive things this year.
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