Nu Skin sets aside as much as $90 million in inventory, restructuring costs

Nu Skin plans to write off more than $65 million in inventory and budget for as much as $25 million in restructuring charges, as it tries to halt an earnings slide that saw the company lose money in the third quarter with more losses expected in the future. 

Nu Skin is a multilevel marketing company based in Provo, Utah. The company recently reported third quarter earnings that CEO Ryan Naperski characterized as “softer than expected.” 

Nu Skin sells a variety of dietary supplements, skin care products and beauty care devices. In 2018 the company formed an investment arm subsidiary dubbed Rhyz that most recently acquired the skin care and beauty device brand BeautyBio. 

Earnings slide continues 

In its most recent third quarter 2023 earnings release, the company reported $438.2 million in revenue, compared to $495.9 million for the same period a year previously. That represented a 12% year- over- year drop, or 10% on a constant currency basis. 

The weakest regions for the company were the Americas, where revenue fell 30%, and Southeast Asia/Pacific, where revenue fell by 18% compared to Q3 2022 figures. The number of active customers fell by 19% or more in all markets except Japan and Hong Kong/Taiwan, where declines were less steep. 

The company lost 74 cents a share in the quarter. 

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Nu Skin revised its 2023 earnings forecast to between $1.92 and $1.96 billion. The company has been on a steep earnings slide since the end of the pandemic. In 2021 the company notched $2.7 billion in annual revenue, which dropped to $2.23 billion in 2022. 

The company’s stock price has been on a similar slide.  Nu Skin stock (NYSE: NUS) traded at more than $80 a share in mid-2018;  today the company’s shares are trading at $17.35. 

In a press release announcing the earnings results, James D. Thomas, Nu Skin’s chief financial officer, didn’t mention specifics about what products would be discontinued. But he did say that “we made the decision to accelerate our product portfolio optimization resulting in a $65.7 million Q3 inventory write-off and are adjusting our annual guidance, which includes an anticipated Q4 restructuring charge of $15 to $25 million." .”  

Trying to compete with online sellers 

Included in the earnings press release was information about two new apps that Nu Skin has developed to better engage with distributors and end users. The apps are called Vera and Stela. Vera offers personalized skin health consultations based on selfies taken on cell phones, while Stela is supposed to allow distributors to manage their businesses more easily.  

It is part of the trend in the MLM world toward developing new online tools to better compete with the proliferation of online sellers, who can offer products that are both cheaper and easier to buy than what is typically possible when dealing with the traditional MLM model.  

Network marketing companies in general have experienced falling revenues in North America, a trend that goes back several years. For example, Amway, the bellwether for the category and parent company of the Nutrilite line of supplements, has seen its annual revenue fall from $11.8 billion in 2013 to $8.1 billion in 2022.