Nu Skin revenues tumble, highlighted by a 50% decline in China

By Simon Pitman contact

- Last updated on GMT

Nu Skin revenues tumble, highlighted by a 50% decline in China

Related tags: Southeast asia

Nu Skin’s third quarter revenues show a big fall as the company continues to suffer from a crackdown on its practices in China earlier this year, and problems in other regions also come to the surface.

The company said that revenues for the quarter fell by 30% compared to the prior year, to $638.8m, as sales also fell in the Southeast Asia and EMEA regions.

However, in the comparable period last year, the company did point out that it had registered sales of $203m attributable to its limited-time introduction of its ageLOC TR90 weight management system, which would be difficult to replicate in the longer-term.

Currency translations make matters worse

Revenue during the quarter was also negatively impacted by 3% as the US dollar continued to be strong against a number of leading international currencies.

"We believe our business in China is stabilizing as we are seeing improving trends in the early sales leader pipeline, we strengthened our capital structure and balance sheet flexibility, we are making good progress in our product development efforts, and we generated positive operating cash flow,”​ said Truman Hunt, president and chief executive officer.

"Our sales results are heavily impacted by our product launch schedule. Last year's second-half launch, which generated approximately $550 million in sales, provides a difficult year-over-year comparison.”

Hunt went on to say that, moving on from the impact of the self-imposed sales ban in China earlier in the year, the dynamics of the core business gives reason to believe that he is confident about the long-term prospects for the business.

China, EMEA and Southeast Asia all post declines

Drilling down on a regional basis, the results show that revenues fell by 50% in Greater China, to $226.7m, although it was underlined that approximately $150m of revenue was generated by the ageLOC TR90 promotion in the corresponding period last year.

In North Asia revenues increased 2% to $20.5m, mainly generated by gains in the South Korea market. In the Americas revenues increased 19% in local currencies to $76.7m, but this figure was offset significantly by foreign currency translations, which meant reported revenues declined 10%.

In the EMEA region revenues declined 8% to $40.9m. And in the Southeast Asia market revenues fell by 30% to $88.9m, a result that came off the back of fewer sales representatives in the region.

Outlook

Looking ahead, the company says it remains focused on rekindling its business in China and is preparing a significant number of new product launches for the coming quarters.

However, the outlook remains compromised for the business on account of forecast sales for its ageLOC TR90 brand, which are expected to be well below those for the corresponding period in the previous year.

“While we anticipate core business trend improvement, we estimate $20 million of LTO sales in the fourth quarter versus $350 million of LTO sales in the fourth quarter of 2013, and $80 million of LTO sales in the third quarter of 2014,”​ Hunt said.

Related topics: Business & Financial, Skin Care

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