NuSkin expects continued modest growth in China despite trade war fallout

By Hank Schultz contact

- Last updated on GMT

Getty Images
Getty Images
NuSkin, a global network marketing company selling personal care products and dietary supplements, recorded 7% revenue growth, adjusted for currency fluctuations, in its year-end earnings statement.

NuSkin reported $2.68 billion in revenue, an 18% improvement for the entire year. New product launches in the company’s extensive skin care line, called LumiSpa, helped drive the increase, notching $130 million in sales in the quarter.

China leads the way

Currency fluctuations, including the Chinese yuan and the Argentinian peso, have hit the company hard.  Without the currency adjustments, the company’s earnings only rose 3% in the fourth quarter.

Mainland China is the Provo,UT-based company’s biggest market.  It accounts for about a third of the company’s overall revenue.  Sales in teh country rose more than 21% in the company’s fiscal 2018.  But they have slowed significantly in teh fourth quarter, when they rose only 2%.  China’s economy has been slowing of late, and the trade war started by US President Donald Trump has market watchers worried.

“While there has been some concern about the impact of trade negotiations on the China economy as well as increased media and regulatory scrutiny around the nutrition market, we continue to anticipate growth in 2019,”​ said NuSkin President Ryan Napierski.  He made his comments as part of an earnings call with analysts that is posted in transcript form on the site seekingalpha.com​.

Even with the difficulties in the China market, NuSkin is forecasting mid single digit sales growth in the country for fiscal 2019.

Sourcing improvements

NuSkin also highlighted the advances the company has made in sourcing botanical ingredients.  In 2015 the company established a subsidiary named GroVive in Utah.  The company specializes in high technology vertical greenhouses and now has two facilities in the state under full production. Using proprietary software to deliver nutrients and monitor growing conditions, the company says in can achieve a seven day growing cycle for wheat grass, six days for micro greens and five days for alfalfa sprouts.  The ingredients are used in NuSkin’s line of weight management and general wellness supplements.

Investigation hangover

NuSkin has been recovering in the Chinese market following the announcement of a government investigation into the company’s business practices in January 2014.  The company’s stock price had peaked at more than $132 a share in December 2013.  In the wake of the investigation announcement, the share price plummeted, falling to about $76 a share in February 2014, and bottoming out at about $29 a share two years later. The company’s shares are trading at about $63 today.

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