Nu Skin Enterprises Inc.(NUS) reported mixed results in the fourth quarter of 2014 as sales marginally beat expectations while earnings missed the same.
Fourth-Quarter Results in Detail
Nu Skin reported earnings of 77 cents per share, which plunged 62% from $2.02 per share reported in the year-ago quarter due to lower year-over-year revenues and decline in operating margins and higher tax rate. Earnings also missed the Zacks Consensus Estimate of 81 cents by 4.4%. However, results were at the higher end of management’s guidance of 72-77 cents.
Revenues of $609.6 million plummeted more than 42% year over year due to currency headwinds.
Currency fluctuations negatively impacted sales by 4% ($100 million). Also, sales were significantly impacted by the product launch schedule in the fourth quarter. Nu Skin did not did not launch any new product after introducing TR90 weight management system in the fourth quarter of 2013. The regulatory steps undertaken by the company in Mainland China to review a legal issue also impacted sales negatively.
Sales in all the geographic regions declined year over year, especially in Greater China recording 55% decline.
Revenues were, however, near the higher end of the company’s guided range of $590 to $610 million and beat the Zacks Consensus Estimate of $597 million by 2.1%.
The company's gross and operating margin also declined in the quarter due to weak sales results. Gross margin declined 190 basis points (bps) to 82.5%, while operating margin declined 190 bps to 15% due to higher general and administrative expenses. Nu Skin recorded 330 bps higher income tax rate in the reported quarter due to a currency charge related to Venezuela earlier in 2014.
Fiscal Results
Nu Skin’s fiscal 2014 earnings came in at $3.11 per share, down 90.9% from a year ago. Earnings also missed the Zacks Consensus Estimate of $4.12 by 2.5%.
The company reported sales of $2.57 billion, declined 19% from fiscal 2013, but beat the Zacks Consensus Estimate of $2.55 billion by a narrow margin.
Other Financial Details
During the quarter, the company paid $20.4 million as dividends and bought shares worth $20.4 million. Nu Skin hiked its dividend by 1.5% to 35 cents per share to be paid on March 18, 2015 to stockholders of record on Feb 27, 2015.
Guidance
Nu Skin expects to witness organic growth in 2015. The company has several product launches in the pipeline such as anti-ageing products in both nutrition (ageLOC Youth supplement) and skin care (ageLOC Me anti-ageing skin cream) categories. However, the company continues to expect currency to weigh down on the top line.
First-Quarter 2015 Outlook
For the first quarter of fiscal 2015, Nu Skin expects sales in the range of $530 to $550 million, including a negative foreign currency impact of $50 million. It expects earnings in the range of 70 to 74 cents.
Fiscal 2015 Outlook
For fiscal 2015, Nu Skin maintains its guidance and expects sales in the range of $2.50 to $2.56 billion. It expects earnings in the range of $3.80 to $4.00 per share.
Stocks to Consider
Nu Skin currently has a Zacks Rank #3 (Hold). A better-ranked stock in the same industry is Helen of Troy Limited (HELE), sporting a Zacks Rank #1 (Strong Buy). Some stocks in the broader retail sector are Bebe Stores, Inc. (BEBE) and Stage Stores, Inc. (SSI), with the same Zacks Rank as Helen of Troy, that warrant a look.
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