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Natural Health Trends Corporation
(NHTC) |
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CEOCFO CEOCFO Monthly Analyst |
"To print this page go to file and left click on print" Natural
Health Trends, Corp. – international expansion driving sales growth for their
Alura™ and Skindulgence™ products 5605 N. MacArthur Blvd. 11th Floor
Bio of CFO, Mr. Woodburn: “Natural Health Trends, was formed in 1988, with
the mandate of forming massage therapy schools in the state of Florida. The company
reorganized itself in 1999, to focus on the distribution channel of the Network Marketing
Industry. Since February 1999, Natural Health Trends focus has been on network marketing,
having one network marketing company as a subsidiary called ekaire. We have subsequently
added a second subsidiary known as Lexxus
International, Inc., which is involved in the network marketing industry.” CEOCFOinterviews: Were these acquisitions, partnerships or new
start-ups? Mr. Woodburn: “ekaire, was an acquisition done in 1999, and
Lexxus was a new start-up.” CEOCFOinterviews: Are these subsidiaries managed together or do you
have different management for each company? Mr. Woodburn: “We have a management team for each
company.” CEOCFOinterviews: What would you say is your most recent and
exciting news? Mr. Woodburn: “The international expansion that we are
currently doing right now is the most exciting to the company. We are currently in
twenty-eight countries; just recently opening up the country of Philippines. That was just
completed about three weeks ago. We have opened up about eighteen countries in calendar
year 2002, and it is our goal to be in fifty countries by the end of 2003.” CEOCFOinterviews: How do you manage to do all of this expansion? Mr. Woodburn: “It’s hard! We are fortunate to have a good
second-tier management team located throughout the world, that physically has moved from
the United States to anywhere in the world that we need people, and they are very willing
to do that on the short-term to get these countries opened up and running. To focus on the
way we are going to do this; we have one person in Asia, one in Europe, and one person
that in charge of Southwest Pacific. There is management below them, as far as presence in
individual countries.” CEOCFOinterviews: What is your distribution model? Mr. Woodburn: “Our distribution model is network marketing,
person to person selling, which is very common in the U.S. and fairly common over seas. A
few of the markets that we are into, India for example, has only had network marketing for
six years, so it is a new opportunity and a new industry in that country. All we do as a
company is two very simple things, supply product when people place an order and send
commission checks on time and accurately to the various sales associates. Once people in
their organizations place orders, then they earn a commission. We do that on a global
basis with about four different currencies and in about seven different languages. It is
all done ‘real time’ through the Internet. With the software genealogy, which is
the down line for the sales organization, you can see everyone’s down line, and what
your commission checks are going to be, all in ‘real time’.” CEOCFOinterviews: How do people find out about you so that they can
work for the organization, and what attracts people to the company? Mr. Woodburn: “It’s mainly through people telling other
people. It is person-to-person selling. If you know someone that is interested in the
products that we have to offer, or maybe a second income opportunity. Mostly it’s our
reps sharing our wonderful products and income opportunity with a friend or
relative.” CEOCFOinterviews: You have had a lot of good sales growth, a lot of
companies have approached selling healthcare or holistic products through network
marketing before and have fallen flat on their faces; NHTC has managed to survive and do
well in this industry, why? Mr. Woodburn: “The first reason is our seamless worldwide
compensation plan that we offer our independent distributors. What that means is that
someone in the United States can sponsor someone in Eastern Europe, India, Australia or
anywhere that we do business, and receive commissions on the volume that the other people
do and no other company can offer that opportunity. The
second reason is the quality of our products and the quality of our distributors. Our
products are high impact products mainly focused around two products, one of which is
Alura™, which is a female intimacy product and the second is the product called
Skindulgence, which is a natural facelift product. With both Alura and Skindulgence,
within thirty minutes of using the product, the person will notice a difference.” CEOCFOinterviews: Those are your hottest selling products? Mr. Woodburn: “Yes. The Alura™ and Skindulgence products
probably account for 80% of all of our sales.” CEOCFOinterviews: What is your cost of goods? Mr. Woodburn: “Our costs of goods is roughly 10-15% of our
sales price. We pay out 60% in commissions, and we need about 25% to run the
company.” CEOCFOinterviews: What does the consumer pay to get those products? Mr. Woodburn: “It varies by the sku; we have individual trial
packs for sampling, which is a unique marketing concept. The fact that we have small
individual applications of our product that a person can hand out to friends and relatives
to sample. There are a number of different sku’s of our product, anywhere from a
one-time use to a ninety-day supply.” CEOCFOinterviews: How are the reorders on your products? Mr. Woodburn: “We found that over 50% of people order our
products more than one time; and this is for both products.” CEOCFOinterviews: What is the competition in the market place for
Alura, and how is you product superior? Mr. Woodburn: “We have a patent on the product, which allows
us to maintain some kind of exclusivity. There are companies that are out there that have
tried to come up with this type of product, but we believe our product is superior to
theirs. There is competition out there that has developed because of our success.” CEOCFOinterviews: What is the basic ingredient that makes this
product so effective? Mr. Woodburn: “The basic ingredients for Alura™, are
L-Argenine and menthol. Those two ingredients help create the opportunity to achieve
greater sexual satisfaction.” CEOCFOinterviews: Is Alura™ for older women or do younger
women find it useful as well? Mr. Woodburn: “It is for women of all ages. Our
recommendations are for women from eighteen to seventy. Women of all ages can benefit from
our product.” CEOCFOinterviews: Is Alura helpful to women going through menopause
and suffering from dryness? Mr. Woodburn: “It is an enhancement for younger women, however
an additional benefit of our Alura™ product is that it does help with lubrication for
older women that have gone through menopause.” CEOCFOinterviews: Can you tell us about your Skindulgence product? Mr. Woodburn: “Skindulgence is a thirty minute natural face-lift product. I’d like to emphasize that from start to finish someone can have a facelift done in thirty minutes. It tightens the wrinkles around the face and eyes and even helps eliminate them. Although there are similar type products on the market, Skindulgence is a proprietary formula to us. CEOCFOinterviews: Could your approach to marketing be used to sell
other products? CEOCFOinterviews: Are all of your current products natural based? Mr. Woodburn: “They are so far, however I don’t know if
we will hold true to that as we go into the future and continue to expand the product
mix.” CEOCFOinterviews: Do you ever do any clinical trials? Mr. Woodburn: “That is something we stay away as both our
Alura and Skindulgence products are cosmetics. We have a simple marketing approach,
‘try it and you’ll like it’.” CEOCFOinterviews: What would you say is the driving trend for the
use of your Skindulgence product, and do you find men ordering it? Mr. Woodburn: “I think that the driving trend is that all of
us want to look and feel younger, and we are all looking for that magic potion or quick
fix, if you will. The majority of the users of our Skindulgence products are women, but
surprisingly, a lot of men use our products on a regular basis as well. After your first use, you will see results.” CEOCFOinterviews: Does Skindulgence require continual use to
maintain its affect? Mr. Woodburn: “Yes, It does require use approximately two
times a week to maintain the youthful appearance and the diminishing of wrinkles.” CEOCFOinterviews: Do you have any R&D spending? Mr. Woodburn: “We don’t have any research and
development; we have a small group of manufacturers that we have relationships with. We
rely on their R&D efforts to find products and once they find a good one, they come to
us first with that product to decide whether we want to market it or not. We rely upon
third parties to do all the diligence and research for us, that includes partnerships and
agreements.” CEOCFOinterviews: How big of a market are we looking at with your
products? Mr. Woodburn: “Certainly the Alura™ product to help
create the opportunity for greater sexual satisfaction is well over a 1 billion
dollar-a-year product.” CEOCFOinterviews: Where do you place yourselves? Mr. Woodburn: “We are not even one tenth of 1%. The number
that we come up with on that is with the male alternative, which did $1.5 billion dollars
last year in sales. Female sexual dysfunction is actually a bigger market than male sexual
dysfunction, but it just isn’t talked about. It is a global market type of product
that at a minimum is several hundred million dollars a year market.” CEOCFOinterviews: Is it a pill or is it topical? Mr. Woodburn: “Alura™, is a topical cream, that is
applied to the female genitalia. Our product doesn’t work all the time for everyone,
no product does, but so far from what we have seen in the market place, it has been very
positive and a lot of success has been achieved through the product.” CEOCFOinterviews: Could you tell us about your financial position? Mr. Woodburn: “Yes, We have seen sales and revenues increase
from $8 million in the year 2000 to $25 million last year and we are looking at probably
$40 million in 2002. We have seen nice increases in sales over the last three years. We
continue to expand our operational base as far as countries, and it is our goal to be in
fifty countries by the end of next year. We have increased revenues substantially over the
last three years and I look to increase substantially the revenues over the next two
years. It is our goal to be 100 million dollars per year in revenues in the next two
years.” CEOCFOinterviews: What is your current cash and credit position? Mr. Woodburn: “We are very strong cash wise; at the end of our
filing of the third quarter on September 30th, we were sitting on roughly $4.6
million in cash. We were profitable for the quarter of about $1.6 million dollars. We are
building cash even though we are expanding globally.” CEOCFOinterviews: How many sales reps do you add every year and
what is the percentage that hangs on? Mr. Woodburn: “Unfortunately, an area that our industry that
can improve is that we have some people that do not find success for what ever the reason,
and we are no exception. We probably have seventy percent of the people that join and drop
out, for a period of months for whatever reason. With the growth, we are experiencing so
far; we have not had a system in place to train these people. We are focusing on this very
hard and trying to prove that area of our business.” CEOCFOinterviews: In closing what would you like to say to your
current shareholders as well as potential investors? Mr. Woodburn: “Our vision is to be a global distribution company for great products. We want to establish distribution in fifty markets and once we do that, we can open the floodgates to additional products and everything from A to Z.”disclaimers |
