Nu Skin Enterprises (NUS, Financial) is a $2 billion direct selling company that markets premium quality personal care, nutrition and technology products through a global network of approximately 1 million Actives and Sales Leaders.Â
Founded more than 30 years ago, Nu Skin Enterprises develops and distributes innovative consumer products, offering a comprehensive line of premium-quality beauty and wellness solutions in more than 50 markets worldwide. The company builds upon its scientific expertise in both skin care and nutrition to continually develop innovative product brands that include the Nu Skin personal care brand, the Pharmanex nutrition brand, and most recently, the ageLOC anti-aging brand.Â
The company recently reported second quarter results and updated its revenue guidance. It beats on revenue and increased its EPS during the quarter. The company garnered huge revenues from the promotional events in South Asia/Pacific and Greater China. The company witnessed good sales, driven mostly by the promotional product launches.
Second quarter results
The company's operating margin improved to 13.3% in the current quarter, which was 12.8% in the prior-year quarter.
Gross margin for the quarter was 78.7%, which was 80.3% in the prior-year quarter.
Selling expenses as a percentage of revenue were 41.4% during the quarter.
Share repurchases
The company repurchased $4.3 million of its outstanding shares, with $422.7 million remaining in the authorized share repurchase plan at the end of the quarter.
Dividend
The company declared a quarterly dividend of 35.5 cents per share, which will be paid on Sept. 14 to stockholders of record on Aug. 26.
Positive attributes of the quarter:
- Strong balance sheet.
- Product launches.
- Sales growth.
- Positive cash flow from operations.
- Continued improvements in inventory balance.
Expectations
| Â | Third Quarter | Full Year |
| Revenue guidance | Â | To be between $2.2 billion to $2.24 billion |
| Revenue | To be between $560 million to $580 million | Â |
| EPS | To be between 80 cents to 84 cents | To be between $2.44 to $2.54, or $2.80 to $2.90 when excluding a 36 cent per share non-cash Japan customs charge taken in the first quarter |
The company is committed to returning to local currency revenue growth. Irrespective of the fact that foreign currency trends will continue to be a headwind throughout the year, the company is focused on renewing its growth in China. With a strong pipeline of products, it is investing constantly in its research and development.
For the past 31 years, it has built its reputation and a solid foundation of sound business principles and proven products. It has undertaken the Envision 3.0 initiative to ensure that is structured to sustain growth and achieve the targeted $5 billion and $10 billion revenue goals. With this initiative, it is maximizing its distribution channel to appeal to consumers and to empower entrepreneurs. The company expects the outcomes of this important project to materialise by the end of 2016.
China is critical to the company’s success and it is continually taking initiatives to tap the world’s largest market. The company has great potential in this part of the globe.
The company’s anti-aging solution ageLOC brand has already grossed over $5 billion in sales since 2008. In addition to this range, it is rolling out new core skin care and wellness products that continue to be sought-after skin care and nutritional solutions.
To put it together
Since its introduction in 2008, the ageLOC brand has generated more than $5 billion in sales, and built a loyal following for such products as the ageLOC Youth nutritional supplement, the ageLOC Me customized skin care system, as well as the ageLOC TR90 weight management and body shaping system. As a long-standing member of direct selling associations globally, Nu Skin is committed to the industry's consumer guidelines that protect and support those who sell and purchase its products through the direct selling channel.
The company will continue to introduce its latest ageLOC products in the near future. During the quarter, the company witnessed an increase in sales leaders, which marked a sheer reflection of the strength of the product launches. The company has a strong balance sheet with strong cashflows and is poised for a better future. I think that adding this company will create shareholder returns.
Disclosure: I do not hold any position in the company.
