Retailers, consumers and prices
Check Out Line: Direct selling in difficult times
Jefferies analyst Douglas Lane said quarterly results from direct selling companies — like cosmetics maker Avon and storage and serving containers maker Tupperware — bolsters his positive view on the model, which uses sales representatives to promote its products.
Referring to Avon, Tupperware, Nu Skin, Herbalife and Usana Health Sciences, Lane said in a research note that “these five companies beat Street expectations by an average of over 20% in the June quarter, as well as the upper end of each mgt’s range in the cases one was articulated.”
Avon, for instance, beat Wall Street’s quarterly profit expectations recently, and said it saw a leap in its representatives’ numbers, as more people turn to its easy and flexible sales model to make additional money in the economic slump.
Tupperware’s results also soared past expectations, thanks in part to its presence in emerging markets — a factor that could bode well for all these companies, Lane said.
“Our viewpoint continues to be that the consumer is not apt to lead us out of this recession the same way it did the last recession, and that we like having the exposure to the growth markets of the world, including those in Asia, Central & Eastern Europe and Latin America,” Lane said.
But will everyone now turning to direct sellers to make an extra buck stick around when things get better? Time will tell.
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