China lockdowns pummel another MLM’s bottom line

NuSkin’s shares declined as the company reported a 16% year over year drop in revenues in its third quarter of fiscal 2022.  The decline was 9% when figured on a constant currency basis.

China issues headline list of problems

The Provo, UT-based company, which sells topical beauty products and devices as well as a full line of dietary supplements, attributed of its earnings problems first and foremost to issues in the China market.  But problems in China were only the first item on a list of woes:

“First, continued declines in Mainland China due to the prolonged COVID-related disruptions, including expanded lockdowns throughout the country; second, increasing weaknesses in South Korea related to economic pressures and company price increases; third, persistent global inflationary pressures; and fourth, the strengthening of the US dollar above expectations, placing pressure across our supply chain,”​ said Ryan Napierski, NuSkin’s CEO.

Napierski made his remarks as part of an earnings call with analysts that was posted in transcript form on the site seekingalpha.com.

The company notched $537.8 million in revenue in its third quarter, which was below analysts’ estimates.  Napierski noted, however, that the company saw positive constant-currency growth in four of its seven market segments. That including showing modest growth in North America.

Disappointing earnings undercut share price

Along the earnings disappointment, the company’s profit came in below projections, too.  NuSkin recorded a profit of 47 cents a share in the quarter, which was well off the 98 cents a share recorded in the same quarter of 2021.  That profit report was also well below analysts’ estimates.  They had expected the company to earn about 75 cents a share.

In the wake of last’s week’s earnings report NuSkin’s shares fell by almost 20% before rebounding. The company’s shares, which now trade for about $38.75,  have declined by more than 18% in the past year. That’s actually a smaller decline than other MLM competitors.  Herbalife, Usana and Nature’s Sunshine have all seen their share prices decline by 48% to 60% in the past year.