US direct selling cosmetics company Nu Skin Enterprises has made its intention for the second half of 2015 plain and clear – a return to revenue growth.
Despite the company generating revenue of $560.2m in Q2 2015, down on the $650m it made in the same period in 2014, it was acknowledged that revenue was negatively impacted 7% by foreign currency fluctuations. The company’s President and CEO, Truman Hunt, said he was “pleased with the direction of the business” and confirmed that the company anticipates a return to revenue growth in the second half of the year.
Looking at all of Nu Skin’s active markets, there were declines across the board in both Q2 and half year revenue results. However, on a constant currency basis, the Americas did manage a 5% increase in revenues in Q2 and a 12% increase for the half-year. Overall, Nu Skin reported a profit of $44.7m up from $19.5m the year prior.
Mainland China offered a ray of hope for Nu Skin – good news considering the company was under investigation by the Chinese government over allegations over illegal activity earlier this year. Hunt explained there were some encouraging results in Mainland China including a 19% increase in sales leaders as well as sequential growth in revenue.
However, the second quarter did not deliver such positive results regarding Nu Skin’s sales leaders elsewhere; numbers have on the whole been dwindling in recent years. In Q2, all of Nu Skin's major regions saw a drop in active representatives apart from South Asia/Pacific, which remained the same compared with last year at 120,000. The story was not so different when looking at sales leaders, where all regions apart from the Americas witnessed a decline – the Americas were up 3.5% on the previous period.
“We project second-half local-currency revenue growth of approximately 15%,” said Ritch Wood, Chief Financial Officer. “Our prior guidance anticipated a negative foreign currency impact of 7% in the third and fourth quarters. We now project a negative impact of 10%-11%. Given this impact, we anticipate third-quarter revenue will be in the $600-$620m range with earnings per share of $0.96 -$1.00. We anticipate annual revenue to be in the $2.40-$2.44bn range, with earnings per share of $3.47-$3.55 which includes a $0.12 expense associated with the Venezuela foreign currency charge in the first quarter of this year. Excluding this charge, earnings guidance would be in the range of $3.59-$3.67. Including currency impact, this guidance reflects second-half reported revenue growth of between 5-6%.”
Following the results, shares were seen to soar up to 27% higher. Nu Skin was recently upgraded by Zacks from a "sell" rating to a "hold" rating.
