Operator: Our next question is from Linda Bolton Weiser from D.A. Davidson. Please go ahead.
Linda Bolton Weiser: Hello. So my first question was just a small little question on the financials. You have this other income expense line that has actually been positive. I believe it’s been other income. I think I’m projecting now $7 million for 2023. Can you just clarify what that line reflects and why it’s been like a more positive number in 2023?
Doug Hekking: It’s primarily interest income and just given kind of our position and the strength of our balance sheet and the cash we’re holding. That’s the primary catalyst there. There’s a few other things in there, but that’s the primary contributor there.
Linda Bolton Weiser: Okay. So as far as if you keep a fairly healthy cash balance and interest rates still be pretty high or higher, then that would continue to be a positive line item, I would think. Is that the right thinking there?
Doug Hekking: Yes. With that assumption and no unforeseen investment activity in the near future, I think that’s a fair assumption.
Linda Bolton Weiser: Okay. Got you. And then I guess with Malaysia, I guess, I was just a little bit wondering because you talked about the promotion there, but the local currency sales were down 2% year-over-year, but the customers, active customers were up 4%. So I’m just wondering why the revenue was down but the customers were up. Is that they’re buying less per customer or something like that?
Doug Hekking: Yes. We’re seeing a couple of things. I think one currency, but as you look at constant currency, I think, it’s also the promotional activity and sometimes that stimulates smaller basket size. And as Jim kind of indicated in his introductory comments, we are seeing a little bit of impact in consumer spending relative to the economic environment that we’re really seeing globally right now with kind of the pressure on inflation, but the teams are working hard and we’re seeing heavy engagement. We’ve got a great leadership team in that market.
Linda Bolton Weiser: Okay. I think the thing that the reason may be why your stock is down so much today, just my speculation is that the tone – I mean things seem really different because last quarter, I remember actually raising my estimates and then this quarter, I’m really becoming more conservative with my outlook, trying to just get my numbers down. It just seems like a real change. Like is there something you can pinpoint about like things actually getting worse for the consumer environment? Or is it a particular region? It seems like there was a weakness. I mean, all the regions were down, except for Greater China. So can you just give a little more color on what you think the consumer what’s going on there?
Doug Hekking: Well, I think many of the consumers are feeling the pinch with other areas of spend kind of putting a little bit more pressure on there. And I think we’ve seen some pretty good continuity there in all honesty, but it is something that we hear verbally coming back from the group. I think you always have to look at the comparable promotion periods that we’ve had in prior years sequentially. Malaysia, like I said, sequentially had a small promotion there and it definitely looked sequentially as positive as a result of that. But some of the things that we did relative to promotional cadence and Jim said, we’re trying to go back and find the right balance there. I think we’re committed to that type of activity. But trying to go back and do it so it’s additive to sustainable customer growth.
And so we had some anticipation of some of the things that we’d run a little bit earlier in the year to go back and maybe have a little bit more of a lifting factor. And we definitely saw a lift in the short term, but maybe not the legs that we had hoped on it. And those are things that we’re going to keep trying and testing and I don’t think it always plays out according to plan. But I think as far as the base run rate, I think we’re hanging in there. I think we just like to see that just organic level of sales lift as we do some of these things and kind of propel us forward. And so we’re still going down there. And with Brent kind of taking the new appointment to overseas sales and marketing globally, I think, we’ll see some different things.
I know he’s talking with his leadership team now, and we’ll see some different forward-leaning activities coming out of that as well.
Jim Brown: Yes. I mean, this is Jim. I’m optimistic on the future and definitely for 2024. I just mentioned it a minute ago about some realignment with the organization, which is going to have a big impact. It’s going to have sales and marketing more aligned as well as when we talk about Walter and his excellence and operational efficiency. We have the top ten priority list that we’re going to be working on getting projects done throughout the year next year. And I know we’ll be more efficient and more aligned to get those done. India is coming open, and we’re talking about it being modest in the year, but it’s an exciting market, and there’s opportunities in other regional or other markets around the world from just the India opening to grow those Indian markets as well. So, I think we’re set up to see a good 2024 and growth in 2024. And I think the team is excited.
Linda Bolton Weiser: Okay. I mean – so that sounds encouraging that you have an optimistic outlook. Would it be something where like in 2024, we might see a sequential improvement in the year as it goes out? Like maybe it starts out weaker like it is now, and then it kind of strengthens as the year goes on. Is that what you’re picturing maybe?
Doug Hekking: Yes, I mean you have to build from the base that you’re at now. And that’s definitely expectations. Obviously, in the first quarter, we have Chinese New Year, which has really grown to be an impactful holiday for us. But I think in general essence, that’s the expectation that we would have. And you will look for some – maybe some future comments for us on 2024 and February as we come out with our initial outlook for the year.
Linda Bolton Weiser: Okay. And then just finally, well, actually, I would like to ask a little bit more about India because I do follow Herbalife. And India is really their strongest growing market right now. They’re doing really, really well there. So it does seem like it’s a vibrant market for direct selling and yet traditional business models, companies have often found it hard to penetrate their market, although more companies are going in there, it seems. But can you talk is there something about India that makes it easier for direct sellers to navigate the environment there that makes it attractive for you more so than other businesses? Or kind of why is that a good market [indiscernible] to go after next?
Jim Brown: Yes. I don’t think direct selling the business model is any easier than any other companies out there. India is a complex, large market and we’ve been working in India more than a year to get prepared. There’s all types of things that have to go from registration and different types of business registrations that have to be done. We’re excited about it. A lot of it is because of the success of some of the other markets are companies out there that are doing it. It’s a large market, we’re set up to do it, we actually have a great amount of interest from direct sellers that are in the market now, and we think that’s going to help start that business off. But we didn’t go into India because we thought it was going to be easy.
It’s definitely a complicated market when it comes to logistics and operations and everything that goes on. But it’s the size we have in India population in some of our markets, and they had asked us, when are we going in? And that’s always a catalyst for us is when we have interest and it’s more about a pool than a push, it makes sense to go into a market.
