Business challenges remain a reality for Nu Skin Enterprises

Nu Skin Enterprises Inc. this week reported second-quarter revenues that fell within its guidance range but below its three-month results from the year earlier. 

In its Aug. 1 earnings announcement, Provo, Utah-based Nu Skin posted revenues of $500.3 million, down 11% from $560.6 million in the second quarter of 2022. The beauty and wellness company had forecast second-quarter revenues between $485 and $525 million. 

The multi-level marketer posted diluted EPS (earnings per share) of $0.54, compared to EPS of 67 cents in the second quarter of 2022. 

"Our second-quarter results improved sequentially and landed within our guidance range, driven in large part by year-over-year gains in Mainland China and our Rhyz segments," Nu Skin President and CEO Ryan Napierski said in the earnings announcement. "We are seeing early signs of momentum building in Mainland China; however, we continue to be negatively impacted in several key markets by macro-economic factors and associated price increases that have had a dampening effect on consumer spending and customer acquisition.” 

Rhyz Inc. is a strategic investment arm of Nu Skin, and on Aug. 1—the same day Nu Skin reported its second-quarter earnings—Rhyz announced the acquisition of BeautyBio, a brand offering skincare products and beauty devices. 

The acquisition provides Nu Skin entry into “the fast-growing hydration facial and microneedling markets,” according to an equity research note from Jefferies. While terms of the agreement were not revealed, the deal is expected to add around $10-$15 million in sales in the second half of the year, the financial analysts wrote. 

Nu Skin is forecasting annual revenues of $2 billion to $2.08 billion. When reporting its first-quarter earnings, the company had projected annual revenues of $2.03 billion to $2.18 billion. 

Annual revenues are expected to decline from $2.23 billion in 2022 and $2.70 billion in 2021. 

In the Americas region, for the six months ending on June 30, revenues are down 16% year over year to $208.8 million. Meanwhile, for the same period, revenues in China ($156.3 million) and Southeast Asia/Pacific ($131.6 million) are down 26% and 29%, respectively. 

Nu Skin “is seeing some tradedown in the U.S., most notably for its higher-end products, as consumers continue to balance their discretionary spend,” Jefferies analysts wrote in their equity research note. “Mgmt. views it as a temporary issue, but nevertheless increases uncertainty.” 

In an earnings call, Chief Financial Officer James Thomas pointed out EPS (54 cents) in the second quarter came in close to the high end of its guidance range, thanks partly to the company’s “strict cost control measures,” according to a transcript of the call provided by Seeking Alpha. Nu Skin had predicted second-quarter EPS of $0.45 to $0.55. 

“While we remain confident in the direction and future outcome of our strategy, the persistence of macro headwinds has made the journey more challenging than expected, especially over the past several quarters,” Napierski acknowledged in the call.