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Nu Skin (NUS) Dips on Q3 Earnings & Revenue Miss, View Cut

Shares of Nu Skin Enterprises, Inc. NUS fell nearly 5% after the trading session on Nov 2, following the dismal third-quarter 2022 results. The top and bottom lines missed the Zacks Consensus Estimate and declined year over year.

Results were affected by higher-than-anticipated macro headwinds, including prolonged COVID-related disruptions in Mainland China, sluggishness in South Korea, continued inflation and unfavorable currency.

Despite the tough environment, the company introduced ageLOC LumiSpa iO in the said quarter. This, along with the expansion of ageLOC Meta and Beauty Focus Collagen+ products, and further advancement of its social commerce initiatives, contributed to constant-currency growth in four of the company’s reporting segments.

NUS also remains focused on Nu Vision 2025 for driving long-term growth and shareholder value. It is on track with the core elements, including the introduction of EmpowerMe, personalized beauty and wellness strategy, expansion of its affiliate-powered social commerce business model, and the enhancement of its digital platform.

As part of its EmpowerMe strategy, the company plans to launch its next connected device, ageLOC Body iO, in the second half of 2023. In the first half, it intends to roll out enhancements to its TR90 weight management and body shaping line with a more personalized approach called TRMe.

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

 

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

Q3 Highlights

Nu Skin’s third-quarter adjusted earnings of 47 cents a share declined 51.5% from $97 reported in the year-ago quarter. The metric lagged the Zacks Consensus Estimate of 78 cents.

Revenues of $537.8 million fell 16% year over year on a reported basis. Revenues included a negative impact of 7% from foreign currency fluctuations. On a constant-currency (cc) basis, revenues declined 9%. The top line lagged the Zacks Consensus Estimate of $570 million.

Sales leaders were down 22% year over year to 49,824. Nu Skin’s customer base dropped 11% to 1,239,384. The company’s paid affiliates were down 11% to 243,276.

Adjusted gross profit of $391.2 million declined 18.9% year over year, while the adjusted gross margin contracted 250 basis points to 72.7%. The downside was due to product mix, inflation and foreign currency exchange. Nu Skin business’s adjusted gross margin contracted 190 bps to 76.7%.

Selling expenses declined to $216.5 million from $260.3 million reported in the prior-year quarter. As a percentage of revenues, the metric contracted 30 bps to 40.3% in the reported quarter. Nu Skin business’s selling expenses remained flat year over year at 43.5%.

General and administrative expenses of $138 million declined from $156.5 million in the year-ago quarter. As a percentage of revenues, general and administrative expenses expanded 130 bps to 25.7%.

Adjusted operating income of $36.7 million declined from $65.4 million in the year-ago quarter. The adjusted operating margin contracted 340 bps to 6.8%.

Segmental Results

Segment-wise, revenues (at cc) declined 34% in Mainland China, 4% in the Americas, 11% in South Korea, 1% in Japan and 22% in EMEA. The metric rose 13% and 6% in the Southeast Asia/Pacific and Hong Kong/Taiwan regions, respectively. Total Nu Skin revenues fell 11% at cc from the prior-year quarter.

Other Financial Details

Nu Skin ended the quarter with cash and cash equivalents of $294.1 million, long-term debt of $382.3 million, and total stockholders' equity of $841.9 million.

In the reported quarter, the company paid out dividends of $19.3 million and repurchased $40 million worth of shares. With this, it currently has $185.4 million remaining under the current share repurchase authorization. In a recent development, management announced a dividend of 38.5 cents per share, payable on Dec 7, 2022, of shareholders’ record as of Nov 25.

Guidance

Nu Skin anticipates revenues of $2.20-$2.25 billion for 2022, suggesting a 16-18% decline from the year-ago period’s reported figure. The company envisions an unfavorable foreign currency impact of 5-7% on 2022 revenues. It earlier expected revenues of $2.33-$2.41 billion.

Management expects 2022 adjusted earnings of $2.40-$2.60 per share, down from the prior mentioned $3.30-$3.60. The current projection also suggests a decline from adjusted earnings of $4.14 reported last year.

For the fourth quarter, Nu Skin expects revenues between $500 million and $550 million, including an unfavorable foreign currency impact of 8-10%. The current revenue projection suggests an 18-26% decline from the year-ago quarter’s reported level. The company expects adjusted earnings of 40-60 cents a share for the fourth quarter, down from $1.11 reported in the year-ago period.

 

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The Zacks Rank #4 (Sell) company’s share price has decreased 17% in the past three months compared with the industry’s decline of 27.6%.

Stocks to Consider

We highlighted some better-ranked stocks from the broader Consumer Staples space, namely Constellation Brands STZ, Dutch Bros BROS and Limoneira Co LMNR.

Constellation Brands currently has a Zacks Rank #2 (Buy) and an expected long-term earnings growth rate of 11.1%. STZ has a trailing four-quarter earnings surprise of 10.5%, on average. The company has gained 5.6% in the past year.

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

The Zacks Consensus Estimate for Constellation Brands’ current financial-year sales suggests growth of 3.5% from the year-ago reported numbers, whereas the same for earnings suggests a decline of 5.1%. The consensus mark for STZ’s earnings per share has moved down 5.7% in the past 30 days.

Dutch Bros currently has a Zacks Rank of 2. BROS has a trailing four-quarter earnings surprise of 53%, on average. It has a long-term earnings growth rate of 32%. The company has declined 48.6% in the past year.

The Zacks Consensus Estimate for Dutch Bros’ current financial-year sales suggests growth of 51.2% from the prior-year reported number, whereas the same for earnings suggests a year-over-year decline of 73.9%. The consensus mark for BROS’ earnings per share has moved down 25% in the past 30 days.

Limoneira currently carries a Zacks Rank #2. LMNR has a trailing two-quarter earnings surprise of 13.3%, on average. It has a long-term earnings growth rate of 15%. The company has declined 20.4% in the past year.

The Zacks Consensus Estimate for Limoneira’s current financial-year loss per share suggests growth of 67.9% from a loss per share of 28 cents reported in the year-ago quarter, whereas the same for sales suggests a decline of 1.6%. The consensus estimate for LMNR’s loss per share has narrowed by 2 cents in the past 30 days.


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