Yahoo Finance USANA (NYSE:USNA) Misses Q2 Revenue Estimates
Health and wellness products company USANA Health Sciences (NYSE:USNA) fell short of analysts' expectations in Q2 CY2024, with revenue down 10.6% year on year to $212.9 million. The company's full-year revenue guidance of $865 million at the midpoint also came in 2.1% below analysts' estimates. It made a GAAP profit of $0.54 per share, down from its profit of $0.89 per share in the same quarter last year.
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USANA (USNA) Q2 CY2024 Highlights:
Revenue: $212.9 million vs analyst estimates of $221 million (3.7% miss)
EPS: $0.54 vs analyst expectations of $0.65 (16.9% miss)
The company dropped its revenue guidance for the full year from $885 million to $865 million at the midpoint, a 2.3% decrease
Gross Margin (GAAP): 81.1%, in line with the same quarter last year
Market Capitalization: $880.1 million
“Second quarter operating results were below our expectations,” said Jim Brown, President and Chief Executive Officer.
Going to market with a direct selling model rather than through traditional retailers, USANA Health Sciences (NYSE:USNA) manufactures and sells nutritional, personal care, and skincare products.
Personal Care
While personal care products products may seem more discretionary than food, consumers tend to maintain or even boost their spending on the category during tough times. This phenomenon is known as "the lipstick effect" by economists, which states that consumers still want some semblance of affordable luxuries like beauty and wellness when the economy is sputtering. Consumer tastes are constantly changing, and personal care companies are currently responding to the public’s increased desire for ethically produced goods by featuring natural ingredients in their products.
Sales Growth
USANA is a small consumer staples company, which sometimes brings disadvantages compared to larger competitors benefitting from better brand awareness and economies of scale.
As you can see below, the company's revenue has declined over the last three years, dropping 11.3% annually. This is among the worst in the consumer staples industry, where demand is typically stable.
This quarter, USANA missed Wall Street's estimates and reported a rather uninspiring 10.6% year-on-year revenue decline, generating $212.9 million in revenue. Looking ahead, Wall Street expects sales to grow 2.6% over the next 12 months, an acceleration from this quarter.
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Operating Margin
Operating margin is an important measure of profitability accounting for key expenses such as marketing and advertising, IT systems, wages, and other administrative costs.
USANA has done a decent job managing its expenses over the last two years. The company has produced an average operating margin of 9.9%, higher than the broader consumer staples sector.
Looking at the trend in its profitability, USANA's annual operating margin might have seen some fluctuations but has remained more or less the same over the last year. Shareholders will want to see USANA grow its margin in the future.
This quarter, USANA generated an operating profit margin of 8.4%, down 1.9 percentage points year on year. Since USANA's operating margin decreased more than its gross margin, we can assume the company was recently less efficient because its general expenses like sales, marketing, and administrative overhead increased.
Key Takeaways from USANA's Q2 Results
We struggled to find many strong positives in these results. Its EPS and revenue missed Wall Street's estimates this quarter and its full-year revenue forecast was lowered. Overall, this quarter could have been better. The stock traded down 3.1% to $44.40 immediately following the results.
USANA may have had a tough quarter, but does that actually create an opportunity to invest right now? When making that decision, it's important to consider its valuation, business qualities, as well as what has happened in the latest quarter. We cover that in our actionable full research report which you can read here, it's free.
