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Lessons learned during Chinese regulatory crackdown help Nu Skin weather crisis

By Hank Schultz contact

- Last updated on GMT

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Getty Images

Related tags: Network marketing, Dietary supplement industry

Nu Skin Enterprises says online functionality has helped it post better than expected results even as the global pandemic crisis hamstrings the core face-to-face concept of the multi level marketing model.

Nu Skin, which is based in Provo, UT, is a network marketing company that sells dietary supplements and personal care products in 53 countries.  The company reported first quarter earnings recently that beat its own estimates, something that CEO Ritch Wood attributed to difficult lessons learned during China’s ‘100 day’ regulatory review last year of how network marketing companies did business.  For a number of years Mainland China has been one of Nu Skin’s key markets.

Hard lessons

“While Nu Skin is not immune to a disruption of this magnitude, we are fortunate to have a flexible business model, built on empowering people to work remotely. For example, more than 80% of our revenue globally is already processed online. We also learned valuable lessons in 2019 when government actions significantly restricted meetings and gatherings for much of the year in Mainland China,”​ Wood said in an earnings call with analysts.  A transcript of the call was posted on the site seekinglapha.com​.

“This experience has helped prepare our business and sales representatives to operate in today's reality. This is demonstrated by the fact that we produced first quarter results above our guidance, with revenue of $518 million and earnings per share of $0.36, including a 2% foreign currency headwind,”​ he added.

Nu Skin reported $518 million in revenue in its first quarter, which represented a 17% drop from the same period a year previously. Earnings per share and numbers of sales associates and customers were also down.  But according to CFO Mark Lawrence, these figures were expected to be worse.

“First quarter revenue and earnings per share came in above the top end of our guidance range,”​ Lawrence said in the earnings call.

Nu Skin’s stock price bottomed out at $12.52 in mid March as stock traders were concerned about how shelter in place orders would impact the business operations of MLMs.  The stock has since rebounded and trades above $34 a share today.

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