India sales surge: Herbalife’s Q4 APAC sales hit new record, but China trade dips
In contrast, China delivered a lacklustre performance as net sales were down eight per cent in Q4 2020 year-on-year.
In its latest financial report, Herbalife said net sales in Q4 were up by double digits in three out of five of its largest markets – namely US, Vietnam and India.
The other two markets – China and Mexico saw a decline in net sales.
A breakdown of the figures showed that net sales in India broke US$100m for the first time in Q4. This is year-on-year growth of 21 per cent and has been attributed to a 120,000 rise in new customers.
“The growth in India contributed to a record net sales quarter for the APAC region, which increased 14 per cent versus the prior year,” Chairman and CEO John Agwunobi said during the earnings call.
Overall, net sales for the company hit US$1.4bn in Q4, which was an increase of 16 per cent as compared to Q4 in 2019.
For 2020 a whole, the company achieved net sales of US$5.5bn, up 14 per cent.
“In fact, each quarter in 2020 set a net sales record for the respective quarter.
“The demand for our nutrition products, combined with the tenacity and entrepreneurial spirit of our distributors, resulted in net sales of $5.5bn, which is a record for the company,” Agwunobi said.
However, the company also pointed out that its gross margins had been pressured by delivery costs. This is because traditional ‘in person’ deliveries had been hit by the pandemic.
For Q1 2021, the company estimates net sales to grow in the range of 8.5 per cent to 16.5 per cent.
As for the entire 2021, it estimates its net sales growth to be in the range of six per cent to 14 per cent.
Digital transformation in China
Digital transformation is one of the areas which the company said it had to put in more effort in, especially in China.
In May, the company is expecting to launch a personal store with Alibaba in China.
The store will allow the company to conduct activities such as customer promotions and loyalty programs.
And by the end of this year, the firm hopes to upgrade its current data infrastructures in China into AI capable.
“There’s a lot of technology-based initiatives in China.
“China is a really high-end technology tool region. Consumers are used to high-end tools, and that's where we're putting a lot of our money this year,” Agwunobi said.
The company expects its sports nutrition portfolio to outgrow its two other core categories: weight management and targeted nutrition in the next two years.
Last year, net sales for sports nutrition was up 25 per cent, targeted nutrition by 20 per cent, and weight management by 10 per cent, according to John DeSimone, president of Herbalife Nutrition.
This is because the company has been offering some of its sports nutrition and target nutrition SKUs available in the US into China and India.
“And I expect that sports will outgrow the other two categories both in 2021 and in the next few years.
“And I also expect that targeted nutrition will outgrow weight management over that same time period,” DeSimone said.
Also, the company will be increasingly moving to new flavours and new products at the regional level as designed by product development teams in each region.
“[For example], flavours in India and particular categories of products like ayurvedic products in India are launching.
“We are seeing flavours in China and new products in South America that are unique to those regions as well,” Agwunobi said.