billion dollar club

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  • 1. Industry News The Billion DollaR Club How the Top Companies Compare by Brittany Glenn
  • 2. Tired of reading about the global economic crisis? Heres the good news: Among the many industries falling by the wayside, the direct selling industry is charting a strong and steady course around the world.So strong and steady that we thought it would be interesting to see how the industrys top companiesthose with annual billings of more than US$1 billion were faring, despite all the doom and gloom reported by the media. We decided to call this very exclusive group of industry leaders the billion-dollar club. Although each company has a healthy respect for todays global economic challenges, each is experiencing continued growth and success. Most of the executives we spoke to believe the current financial crises are responsible, at least in part, for the direct selling industrys current solvency and success. continued on page 8
  • 3. The Billion Dollar Club continued from page 7 And now, wed like to invite you to peek inside the companies that comprise the direct selling Name of Company: Avon Products Inc. industrys own billion-dollar club. Type of Company: Public (AVPNYSE) Number of Employees: 42,000 Number of Markets: More than 100 1. Avon Products Inc. $10.9 Billion Revenue: $10.9 billion in revenue Topping the billion-dollar club list is, of course, New York City-based for last four quarters (Q4 2007 Q3 public company Avon (AVPNYSE), the industrys mother ship. As 2008); $9.9 billion in revenue for 2007 the worlds largest direct seller, Avon markets to women in more than 100 Jul Sep 2008 (Q3 2008): countries through 5.5 million independent sales representatives. $2.6 billion in revenue Judging by Avons latest financial figures and its third-quarter earnings Apr Jun 2008 (Q2 2008): statement, the company is in a growth cycle. $2.7 billion in revenue In 2007, Avons revenue was $9.9 billion. Over the last four Jan Mar 2008 (Q1 2008): quartersQ4 2007 through Q3 2008Avons revenue was $10.9 billion. $2.5 billion in revenue Additionally, third-quarter 2008 revenue grew to $2.6 billion, a 13 percent Oct Dec 2007 (Q4 2007): increase over Q3 2007. $3.1 billion in revenue Avons third-quarter performance reflects continued momentum of our turnaround plan, Andrea Jung, Avon Chairman and CEO, said in a press release. Our investments in advertising and the Representative Value Proposition (RVP) are yielding strong results. Avon was ranked No. 265 on the 2008 Fortune 500 list. Name of Company: Amway 2. Amway Corporation $8.2 Billion Corporation Type of Company: Private In the No. 2 spot is direct selling giant Amway. Its annual sales for 2007 Number of Employees: 13,000 were $7.16 billion, and for 2008 were $8.2 billion. Number of Markets: More than 80 Amway Chairman Steve Van Andel says the company continues Sales: $7.16 billion annual sales to remain optimistic about its future growth potential, despite a bleak in 2007; $8.2 billion annual sales economic outlook in some of its markets. Amways rapid expansion in 2008 around the world and the acceptance of the direct selling business model by countries such as Russia, India, Ukraine and others, has blunted the impact of the economic downturn on our company, he says. In late 2007, Amway completed its production and warehousing facility in Vietnam. Since then, Amway Vietnam Co. Ltd. has become one of the companys fastest-growing markets. Officially launched in February 2008, Amway Vietnam now has more than 40,000 independent business owners throughout the country, Van Andel says. In 2009, Amway plans to increase its efforts in more established markets such as the United States and Great Britainto revive our former buoyancy, Van Andel says. Were expecting big things to happen in 2009, such as continuing to increase our visibility through advertising, sponsorships and a growing physical presence around the world, he says.8 Direct Selling News | February 2009
  • 4. The Billion Dollar Club But to a certain extent, Vorwerk is 3. Vorwerk & Co. KG $3.15 Billion protected from financial turbulence. As a Founded in 1883 as a carpet company, Wuppertal, financially viable, family-owned company, we German-based private firm Vorwerk & Co. KG has been are not dependent on banks, Hardt says. selling quality productsfrom household appliances to Hardt says, as others have, that more people may be cosmeticsthrough the direct sales channel since 1930. willing to join Vorwerkand other direct selling companies, For 2007, Vorwerk reported a sales volume of $3.15 billion tooduring tough financial times. Availability of salespeople (2.32 billion). is one of the most important factors for success in direct Vorwerk is the parent company of JAFRA Cosmetics, sales, he says. Our growth expectations are unlimited. which had a sales volume of $469.71 million (342 million) in 2007. Regarding the current monetary malaise affecting countries worldwide, Vorwerks managing partners decided not to participate in the global economic crisis, says Vorwerk Senior Vice President of Corporate Communications Jrgen Hardt. In truth, the Europeanand especially German Name of Company: Vorwerk & Co. KG economy is better prepared for global turbulences than other Type of Company: Private parent company parts of the world. of JAFRA Cosmetics While Hardt says Vorwerks growth has been significant Number of Employees: 23,000 in the past 10 years, he admits the firm must be careful to Number of Markets: 61 balance potentially negative influences. The company will Sales Volume: 2.32 billion ($3.15 billion) in not be totally free of the negative impact of the crisis, he says. sales volume for 2007 While our business isnt countercyclical to the economy, 4. Herbalife Ltd. $2.4 Billion as of Q3 2008, it seems to be resilient to the economy, Los Angeles-based public company Herbalife says Des Walsh, Herbalife Executive Vice President, (HFLNYSE) sells its products through more than Worldwide Operations and Sales. Eighty percent of our 1.9 million independent distributors who conduct business is outside the United States, so were constantly business worldwide. In 2007, Herbalifes net sales were operating in various economies. Naturally, in a tough $2.14 billion. Over the last four quartersQ4 2007 economic climate, our business opportunity is even more through Q3 2008the companys net sales were attractive to someone who loses his job or is in need of $2.4 billion. supplemental income.