Nu Skin Enterprises, Inc. is on unstable grounds due to persistent and strong market pressure in the Chinese mainland, in addition to an adverse currency impact that is dragging down the company's gross margins.
Consequently, Nu Skin has been feeling a weakness of sorts in the top and bottomline in the last few weeks. These familiar headwinds were very apparent in the company's third-quarter 2019 results, wherein management trimmed down sales and earnings guidance for the current year.
Obviously, the dismal performance and forecast have made the quality of the company less favorable for analysts. This is clear from a decrease of 4.6 percent for 2019 earnings based on Zacks Consensus Estimate, which has changed over the past 30 days to $3.11.
In addition, Nu Skin's stocks have fallen 17.2 percent since its earnings release. As a matter of fact, consistent mediocre performance has been adding weight on investor sentiment. Clearly, Zacks No. 4 ranking of "Sell" on the stock has slipped 23 percent in the past two quarters against the market's growth of 11 percent.
For some time now, Nu Skin Nu Skin has experithe enced a strict regulatory environment in mainland China, largely because of government limits on corporate meetings. The region's recently completed 100-day policy initiative to audit food and direct sales services culminated in limited sales conferences, media scrutiny, and negative customer feedbacks.
As a result, in the third quarter of 2019, revenues from the Mainland China region fell by nearly 23 percent. In contrast, sluggishness in this area has caused its margins to drop 16 percent year-over-year.
In the same quarter, revenues from other regions such as the Pacific, South Korea, and Southeast Asia also showed a significant retreat.
The prominent presence of Nu Skin on the international market exposesa it to considerable risk of currency volatility. Adverse foreign exchange impact in the third quarter continued toa put heavy load on the top line and margins of the company. Nu Skin expects that forex fluctuations will affect its revenues by nearly 4 percent this month.
Meanwhile, the company issued an ambitious outlook for 2020, during the third-quarter earnings call. The organization anticipates sales of $2.40-$2.44 billion for the full year, despite currency headwinds.
While Nu Skin is undertaking several measures to cope with a highly-stacked market and sales competition, analysts are yet to see if such factors can completely offset the other challenges it is facing.
Nu Skin Enterprises was established in Provo, Utah in 1984. It is an American marketing firm engaged in the development and sale of personal care products and dietary supplements.
