The company’s shares are down nearly 50% in 2019.
On Wednesday, shares of Nu Skin fell sharply after the company warned investors about a disappointing upcoming earnings report. The company said that China has been cracking down on health products, which is causing a drag on its sales.
Nu Skin will release its second-quarter earnings report on Aug. 6. But this week, the company preemptively updated its guidance for the rest of 2019. Here is a breakdown of the company’s updated guidance versus what investors were expecting:
- Expected revenue: Between $660 million and $680 million
- Updated revenue: Between $622 million and $623 million
- Expected earnings per share: Between 91 and 98 cents
- Updated earnings per share: Between 82 and 84 cents
Nu Skin Faces Major Headwinds Going Forward
Nu Skin is a multi-level marketing (MLM) company that sells personal care and nutrition products. And 2019 has been a challenging year for the company.
Nu Skin’s shares are down 37% year to date and down nearly 50% from a year earlier. This latest drop caused Nu Skin to hit a new 52-week low.
The company’s CEO Ritch Wood issued a press release saying that the company was adjusting its guidance due to declining sales in China. Earlier this year, China launched a 100-day campaign aimed at cracking down on illegal marketing practices by healthcare companies.
Wood said China’s new policy imposed additional restrictions on sales meetings and media scrutiny. The heightened scrutiny and added restrictions impacted the company’s ability to find and retain new customers.
Will Nu Skin Be Able to Bounce Back?
Nu Skin is no stranger to volatility but this is a serious problem for the company. And it’s unlikely Nu Skin will be able to quickly rebound anytime soon. China accounted for 33% of the company’s revenue in 2018.
Shortly after the announcement, DA Davidson downgraded the stock from buy to neutral and lowered its price target from $88 to $38. Stifel analyst Mark Astrachan said that short-term improvement from the company is “extremely limited.”
