Natural Health Trends Corp., the Rolling Hills Estates, California-based direct-selling and e-commerce company that markets premium quality personal care, wellness and “quality of life” products under the NHT Global brand, recently announced its financial results for the quarter ended September 30, 2017. Total revenue decreased 43 percent to $40.1 million, compared to $70.7 million in the third quarter of 2016.
Revenue from the company’s Hong Kong operations, which represented 87 percent of total revenue, decreased 47 percent to $35.0 million, compared to $65.9 million in the third quarter of 2016. Revenue outside of Hong Kong increased 6 percent to $5.1 million, compared to $4.8 million in the third quarter of 2016.
Operating income decreased 44 percent to $8.5 million, compared to $15.2 million in the third quarter of 2016. As a percent of total revenue, operating income was 21 percent, compared to 22 percent in the third quarter of 2016. Net income was $7.3 million, or 65 cents per diluted share, compared to $12.6 million, or $1.12 per diluted share, in the third quarter of 2016. The number of Active Members decreased 7 percent to 99,690 at September 30, 2017, compared to 107,290 at June 30, 2017, and decreased 19 percent compared to 122,900 at September 30, 2016.
Year to date, total revenue decreased 33 percent to $151.5 million, compared to $225.4 million in the first nine months of 2016. Operating income decreased 22 percent to $34.4 million, compared to $44.1 million in the first nine months of 2016. As a percent of total revenue, operating income was 23 percent, compared to 20 percent in the first nine months of 2016. Net income was $28.1 million, or $2.49 per diluted share, compared to $36.0 million, or $3.14 per diluted share, in the first nine months of 2016.
“While we made progress during the third quarter to revitalize sales growth, certain short-term factors exerted significant adverse effects and masked a quarter that was otherwise indicative of positive developments,” saidd Chris Sharng, President of Natural Health Trends Corp. “The difficult market conditions we have been experiencing since the third quarter of 2016 were further compounded by the 20th anniversary of Hong Kong’s handover in July, as well as China’s Communist Party’s 19th National Congress in October, which tempered economic activities. These events impacted the operations of our logistics partners and detracted from our leaders’ ability to organize meetings, which hindered our progress in comparison to the prior quarter. As we view both occurrences as short-term issues, we are working to revitalize sales in Asia through enhancements to our incentive programs as well as adjustments to our bonus and reward programs in an effort to provide more resources to up-and-coming members.”
Sharng further sateded, “Partially offsetting the year-over-year decline in net sales was strength in our emerging international markets including: Peru, Northern Europe, Southeast Asia and Japan. We also received positive responses from our members to our most recent product introductions during the quarter, notably OcuFocus, NaturalGlo and CogniMax. Further, after receiving approval for a direct selling license in Malaysia, on-site and follow-up orders at our Kuala Lumpur event in August were substantially greater than those of the Macau event in March. Despite challenging market conditions, we were able to maintain a healthy gross profit margin of nearly 80 percent and an operating income margin of over 21 percent due to strong consumer allegiance to our products and proactive expense management.”
To read the full NHT Q3 financial report, click here.