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Nu Skin (NUS) Q2 Earnings Miss Estimates, Trims FY22 View

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Nu Skin Enterprises, Inc. (NUS - Free Report) came up with second-quarter 2022 results, wherein the top line marginally beat the Zacks Consensus Estimate, while the bottom line missed the same. Both revenues and earnings continued to decline year over year.

Management highlighted that the quarterly performance was impacted by extended pandemic-led factors in Mainland China, sluggishness in the EMEA region due to the ongoing conflict, muted global economic conditions weighing on emerging markets and the strengthening of the U.S. dollar. Nu Skin believes that these macroeconomic factors will continue to impact business operations in the short term. As a result, it trimmed full-year revenues and earnings view.

That said, the company remains focused on transforming its business with Nu Vision 2025. This includes EmpowerMe, the personalized beauty and wellness strategy; expansion of affiliate-powered social commerce; further adoption of recently launched Vera and Stela apps, as well as the introduction of MyShop in China.

Ryan Napierski, president and CEO, said, “Given the current landscape, we are taking aggressive measures to re-align our capabilities and resources with a focus on delivering Nu Vision 2025, which will result in a restructuring event in the second half and reduced operating expenses going forward.”

 

Nu Skin Enterprises, Inc. Price, Consensus and EPS Surprise

Nu Skin Enterprises, Inc. Price, Consensus and EPS Surprise

Nu Skin Enterprises, Inc. price-consensus-eps-surprise-chart | Nu Skin Enterprises, Inc. Quote

Q2 Highlights

Nu Skin’s second-quarter adjusted earnings of 77 cents a share declined sharply from $1.15 reported in the year-ago quarter. The metric fell short of the Zacks Consensus Estimate by a couple of cents.

Revenues of $560.6 million fell 20% year over year on a reported basis. Revenues included a negative impact of 5% from foreign currency fluctuations. On a constant-currency (cc) basis, revenues declined 15%. The top line marginally came ahead of the Zacks Consensus Estimate of $559.9 million.

Sales leaders were down 24% year over year to 50,085. Nu Skin’s customer base dropped 6% to 1,380,615. The company’s paid affiliates were down 16% to 242,133.

Gross profit of $412.5 million declined from $532.1 million reported in the year-ago quarter. The gross margin contracted 200 basis points to 73.6%. The downside was due to product mix and foreign currency exchange. Nu Skin business’ gross margin contracted to 77% from 78.3%.

Selling expenses declined to $219.4 million from $280.6 million reported in the prior-year quarter. As a percentage of revenues, the metric came in at 39.1%, down from 39.9% reported in the year-ago quarter. Nu Skin business’ selling expenses were 42% of revenues, down from 42.8% in the year-ago quarter.

General and administrative expenses of $141.6 million declined from $166.1 million in the year-ago quarter. As a percentage of revenues, general and administrative expenses increased to 25.3% from 23.6% in the prior-year period.

Operating income of $51.5 million declined from $85.4 million in the year-ago quarter. The operating margin came in at 9.2%, down from 12.1% reported in the year-ago quarter.

Segmental Results

Segment-wise, revenues (at cc) declined 42% in Mainland China, 9% in the Americas, 12% in South Korea, 3% in Japan and 31% in EMEA. The metric rose 16% and 6% in Southeast Asia/Pacific and Hong Kong/Taiwan regions, respectively, due to the successful launch of ageLOC Meta and early social commerce adoption. Total Nu Skin revenues fell 15% at cc from the prior-year quarter.

Other Financial Details

Nu Skin ended the quarter with cash and cash equivalents of $363.9 million, long-term debt of almost $387.2 million and total stockholders' equity of $941 million.

During the reported quarter, the company paid out dividends of $19.4 million and repurchased $10 million worth of shares. With this, it currently has $225.4 million remaining under the current share repurchase authorization.

Guidance

Nu Skin now anticipates 2022 revenues to be $2.33-$2.41 billion, calling for an 11-14% decline from the year-ago period’s reported figure. The company envisions an unfavorable foreign currency impact of approximately 5% on 2022 revenues. The company had earlier expected revenues in the range of $2.51 billion to $2.62 billion.

Management now expects 2022 adjusted earnings in the range of $3.30 to $3.60 per share, excluding restructuring and impairment charges as well as charges associated with the fourth-quarter 2021 exit from Grow Tech. The current projection suggests a decline from adjusted earnings of $4.14 reported last year. Earlier, management had guided earnings in the bracket of $3.60-$3.90 per share.

For the third quarter, Nu Skin expects revenues between $550 million and $590 million, including an unfavorable foreign currency impact of 6%. The current revenue projection suggests an 8-13% decline from the year-ago quarter’s level. The company guided third-quarter adjusted earnings in the range of 70 cents to 85 cents a share, down from 97 cents reported in the year-ago period.

The Zacks Rank #4 (Sell) company’s stock has decreased 13% in the past six months compared with the industry’s decline of 15.3%.

3 Hot Bets

Here we have highlighted three better-ranked stocks, namely, G-III Apparel (GIII - Free Report) , Costco (COST - Free Report) and Dollar Tree (DLTR - Free Report) .

G-III Apparel designs, sources and markets apparel and accessories under owned, licensed and private label brands. The stock currently flaunts a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for G-III Apparel’s current financial year revenues and EPS suggests growth of 13.8% and 8.2%, respectively, from the year-ago reported figure. G-III Apparel has a trailing four-quarter earnings surprise of 97.5%, on average.

Costco, which is engaged in the operation of membership warehouses, carries a Zacks Rank #2 (Buy). COST has an expected EPS growth rate of 9.2% for three-five years.

The Zacks Consensus Estimate for Costco’s current financial year sales and EPS suggests growth of 15.3% and 18.1%, respectively, from the year-ago period. COST has a trailing four-quarter earnings surprise of 9.7%, on average.

Dollar Tree operates discount variety retail stores. The stock currently carries a Zacks Rank #2. DLTR has an expected EPS growth rate of 15.5% for three-five years.

The Zacks Consensus Estimate for Dollar Tree’s current financial year revenues and EPS suggests growth of 6.7% and 40.5%, respectively, from the year-ago reported figure. DLTR has a trailing four-quarter earnings surprise of 13.1%, on average.