Those that have been following Blyth (NYSE:BTH) know that I have been negative on the company and its management team. Blyth's second-quarter report proves that ViSalus and other segments of the business are far from bottoming. In fact, the business is deteriorating more than I expected.
Here are some bullet points of the results:
- PartyLite revenues dropped 6%, yet the number of USA sales consultants dropped 16.7%.
- ViSalus revenues declined 47%, and the number of agents from Q1 to Q2 declined 20%.
- For the first time in years, all three business segments contributed to an operating loss in the business.
Overall, the Q2 report is a disaster and took the stock to $5.85, which is a 20-year low. Value investors may be enticed by this price but still think that the company has further downside given the continued deteriorating results.
In my last article, I predicted that in 2014, the company will report a loss of .30 to .90 cents a share, which is still very possible given the last six months has accumulated a loss .50 cents per share. Yet, the last half of the year should produce an operating profit from the PartyLite business, but not from ViSalus.
On another note, I think the company is under-reporting losses of the Health and Wellness segment. My sources, who were top sales consultants for the ViSalus brand, have informed me that the company has not paid their commissions for months. I think that the only way they will ever see that money is if they all collectively file a lawsuit against the company for unpaid commissions. I wouldn't be surprised if we see lawsuits creep up in the near term, further increasing costs and losses for the company.
At this point, I would advise investors to stay away from the stock until we see signs of a bottom (perhaps by Q4). I believe the stock could hit $4 a share.
Also, to provide an update from the last article: The investor relations department of the company did not respond to the issues I addressed in my previous article.
Disclosure: The author has no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. The author wrote this article themselves, and it expresses their own opinions. The author is not receiving compensation for it (other than from Seeking Alpha). The author has no business relationship with any company whose stock is mentioned in this article.