USANA Health Sciences Inc. Q3 2009 Earnings Call Transcript

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2009-10-28 13:54:08.0

Tags: Call Transcript, Enrollment, Earnings, USANA Health Sciences Inc., Distributor Growth, Leadership, Management, Seeking Alpha

Question-and-Answer Session

Operator

(Operator Instructions) Your first question comes from [Deadore Iqbash] - Canaccord Adams.

Deadore Iqbash - Canaccord Adams

Few questions, first on the U.S. market, trends accelerated quite a bit this quarter. Distributor growth was flat year-over-year down sequentially. I understand there’s some seasonality, but I would have expected stronger results given the positive momentum you had in Q2 and heading into the convention. So I was wondering if you can explain the spread between quarter 14% distributor growth and Q3 deceleration, why isn’t the revenue tracking more closely to the distributor growth.

Fred Cooper

I’ll take my first attempt at that and then I’d also like Mark Wilson, who’s over North America in that particular to answer it for you as well. One of the things we are seeing in our particular market is the fact that when the economy gets difficult, many of our customers and our associates who are registered as associates, but are acting more as our preferred customer purchases are not purchasing in the same quantity or are leaving us as we measure the number of active associates to us.

So we have active campaign going on to try to bring them back and entice them to make additional purchases with us. So to that end, while we are getting good customer enrollment they were pleased with our incentives. We’re trying to make sure. We also focus on keeping them for a longer period of time and in that quarter that was part of the reason why you see a decline even though enrollments looked fairly well.

Mark Wilson

The only thing I would add is, we were disappointed in the third quarter with the activity. It wasn’t what we would expect it or hope to have. We’re continuing to look for ways to excite them. We’ve been going back and working with some of our more successful leaders to see how we can ramp things up and get them more engaged. We have several of them that I think back in the game and looking to be a little more excited.

We also had a little trend downward on the third quarter waiting in anticipation of convention, what’s going to be launched and it takes a little time for them to kind of get reengaged and moving forward. We are an international too, so we’re having leaders that are look to go to other country as we’re growing in another market, which is always a catch 22 for us.

 

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