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Nu Skin Stock Up 33% in a Year, Sales Leaders a Major Driver

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Nu Skin Enterprises (NUS - Free Report) has been quite an attractive investing pick. Shares of this renowned cosmetics company have surged 33% in the past year compared with the industry’s rise of 16%. Nu Skin has been maintaining its glow on the back of a sturdy network of sales leaders and customers. Further, the company focuses on capturing greater market share and maintaining growth momentum through innovations. Let’s take a closer look at these aspects that have aided the company to be a high-flier.



Sales Leaders & Customers: Reasons for Success

Nu Skin sells and distributes products through a network of sales leaders and customers, spread across 50 markets globally. We note that the company’s top line has been consistently benefitting from growth in sales leaders. In fact, during the second quarter of 2018, sales leaders improved approximately 21%. This was preceded by a rise of 16% and 33% during the first quarter of 2018 and the fourth quarter of 2017, respectively. The company plans to further empower sales leaders through improved training and technological enhancements.

Nu Skin also boasts an expanding customer base, which has enhanced sales leaders. Notably, the company’s customers grew approximately 8% during the second quarter of 2018. This was preceded by a rise of 7% in the first quarter and 8%, 7%, 5% and 2% growth during the fourth, third, second and first quarters of 2017, respectively. The company relies on social media along with well-knit product and marketing programs to extend customer reach.

Other Strategies

Nu Skin regularly engages in innovation to ensure parity of its offerings with the evolving beauty and wellness space. The company relies on advanced technologies and well-strategized programs to ensure success of product launches. In this respect, worth mentioning is the company’s launch of the revolutionary ageLOC LumiSpa that has been performing well in several markets lately.

Apart from this, the company has been working toward empowering sales leaders through the sales compensation program — Velocity. In December 2017, the company successfully rolled out Velocity in the Pacific markets. Further, in the second quarter of 2018, this program was introduced in Taiwan and North America. In July, the same was launched in the markets of Japan and Southeast Asia. Management expects that Velocity will be a significant driver in expanding the company’s business in the future.

Wrapping Up

Although Nu Skin has been struggling with consistent declines in gross margin rates, we expect that the company’s growth drivers will provide adequate cushion in maintaining profitability. Incidentally, Nu Skin’s widening base of customers and sales leaders have been aiding robust growth in most regional segments, as witnessed in the second quarter of 2018. During the quarter, the top and the bottom line improved for the third consecutive period. Such a stellar show encouraged management to raise 2018 revenue and earnings projections. All said, we expect this Zacks Rank #2 (Buy) company to remain a prudent pick for investors.

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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