Nu Skin (NUS) Down More Than 25% in 3 Months: Here's Why
Nu Skin Enterprises, Inc. NUS is grappling with an inflationary environment. The global integrated beauty and wellness company is operating amid challenging macroeconomic headwinds. The company’s strong international presence exposes it to the risk of volatile currency movements.
The downsides mentioned above hurt NUS’s second-quarter 2023 performance. In addition, management lowered its 2023 outlook.
Shares of the Zacks Rank #5 (Strong Sell) company have slumped 26.6% in the past three months compared with the industry’s 17.1% decline. The stock has underperformed the Zacks Consumer Staples’s decline of 3.1% during this time.
Let’s delve deeper.
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Macroeconomic Challenges Hurt Q2 Results
Nu Skin has been witnessing persistent macroeconomic hurdles. Macroeconomic factors and related price increases have affected specific key markets, leading to a slowdown in consumer spending and customer acquisition. These factors hurt the company’s second-quarter 2023 results, wherein the top and the bottom line declined year over year and missed the Zacks Consensus Estimate.
The company’s quarterly adjusted earnings of 54 cents a share declined from the 77 cents reported in the year-ago quarter. Revenues of $500.3 million tumbled roughly 11%. Sales leaders were down 9% year over year to 45,807. Nu Skin’s customer base dropped 25% to 1,041,118. The company’s paid affiliates were down 23% to 187,652.
Nu Skin’s margins have been contracting year over year in the past few quarters. In the second quarter, gross profit of $364.7 million declined from the $412.5 million reported in the year-ago quarter. The gross margin was 72.9%, down from 73.6% reported in the year-ago quarter. The operating margin contracted to 8.5% from the 9.2% reported in the year-ago quarter.
Currency Headwinds
Nu Skin is also battling unfavorable currency headwinds. Any adverse currency fluctuation will likely dent the company’s operating performance. In second-quarter 2023, revenues included a negative impact of 3% from foreign currency fluctuations. The company envisions unfavorable foreign currency impacts of 3-2% on 2023 revenues.
Lowered View
Nu Skin lowered revenue and earnings guidance for 2023. The company anticipates revenues of $2.00-$2.08 billion in 2023, suggesting a 10-6% year-over-year decline. Earlier, revenues were expected to be $2.03-$2.18 billion. Management envisions an adjusted earnings per share (EPS) of $2.30-$2.60 compared with the $2.41-$2.81 stated earlier. The projection suggests a decline from the adjusted earnings of $2.90 reported last year.
Wrapping Up
Nu Skin is on track with its Nu Vision 2025 strategy to become the world’s leading integrated beauty and wellness company driven by a dynamic affiliate opportunity platform. With the help of advanced technology and well-strategized product programs, NUS tries to capture greater market share and maintain growth momentum. Management is successfully launching innovative beauty devices, which have become an essential part of its growth.
Whether these upsides can help Nu Skin counter the downsides above is yet to be seen.
3 Solid Staple Stocks
Inter Parfums IPAR, which manufactures, markets and distributes a range of fragrances and fragrance-related products, sports 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 Inter Parfums’ current financial-year sales indicates 19.7% growth from the year-ago reported figure. IPAR has a trailing four-quarter earnings surprise of 45.9% on average.
Helen of Troy HELE, a provider of several consumer products, currently has a Zacks Rank #2 (Buy). HELE has a trailing four-quarter earnings surprise of 8.1% on average.
The Zacks Consensus Estimate for Helen of Troy’s current fiscal-year sales suggests a decline of 10.1% from the year-ago reported numbers.
e.l.f. Beauty ELF, a cosmetic and skin care product company, currently carries a Zacks Rank #2. ELF has a trailing four-quarter earnings surprise of 108.3% on average.
The Zacks Consensus Estimate for e.l.f. Beauty’s current fiscal-year sales suggests growth of 64.7% from the corresponding year-ago reported figure.
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