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Nu Skin's (NUS) Solid Innovations Aid, Pandemic-Led Hurdles Hurt

Nu Skin (NUS) is benefiting from effective product launches. However, the company is battling challenges stemming from the spread of the delta variant across several markets.

This story originally appeared on Zacks

Nu Skin Enterprises, Inc. NUS is benefiting from strategic growth efforts like innovation and effective product launches. The company’s focus on strengthening sales leaders and expanding the customer base bodes well. That being said, it is battling challenges caused by the spread of the delta variant across several markets.

Let’s discuss.

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Innovations Fueling Growth

With the help of advanced technology and well-strategized product programs, Nu Skin tries to capture greater market share and maintain growth momentum. The company’s long-term strategies stand on three key pillars — Products, Programs and Platforms. Management is encouraged about the company’s launch of beauty device system — ageLOC Boost — in some markets in the first half of the year. Management is also impressed with the rollout of Nutricentials Bioadaptives, a customizable skincare line targeted at millennials and Gen Z.

In a recent update, management highlighted that it is impressed with the launch of Collagen+ in the United States amid pandemic-inflicted disruptions. The company’s Tencent digital tools’ introduction across China, during the third quarter of 2021, bodes well. Management is optimistic about its upcoming product roll outs. It expects to introduce more social commerce tools by the end of 2021 and into 2022. Nu Skin expects 2021 revenues to improve modestly on a year-over-year basis.

Other Growth Efforts

Nu Skin sells and distributes products through a network of sales leaders and consumer groups. The company is focused on empowering them through product launches and engaging technology platforms among other initiatives. It has been conducting a number of promotional seminars online. Nu Skin rolled out its Velocity sales compensation plan as well as enJoy rewards program in the past three years. These programs are doing well and boosting growth in sales leaders and customers. In the second quarter, sales leaders were up 15% year over year to 64,228 on new product introductions and better leader qualification programs.

Management is transforming its business with the help of robust social commerce and distinctive person-to-person affiliate marketing channel to create more brand awareness as well as acquire customers at a higher rate. The company’s focus on building a robust digital ecosystem to enhance customer attraction bodes well.

Several other companies in the cosmetic space have been benefiting from focus on growing its online business. Players like Helen of Troy Limited HELE, Coty Inc. COTY and The Estee Lauder Companies Inc. EL are gaining from strong online trends.

Coming back to Nu Skin, management is on track to roll out its personal recommendation app, Vera, globally. The rollout of its personal product storefront, My Site, bodes well. Further, management is on track to introduce its digital ecosystem, Empower Me. The digital ecosystem will offer personalized beauty and wellness solutions via interactive as well as engaging digital experiences.

Pandemic-led Hurdles

Nu Skin recently lowered third-quarter 2021 revenue guidance to the band of $637-$642 million. The company had earlier guided quarterly revenues in the band of $700-$730 million. The company’s revenues came in at $703.3 million in the same quarter last year.

Management stated that quarterly revenues were hurt by challenges stemming from the disruptions caused by the delta variant across several markets. Unexpected government-imposed restrictions disrupted the sale and distribution of the company’s products, especially across the Mainland China and Southeast Asia regions. Nu Skin also encountered disturbances in its promotional activities including incentive trips and performance of local expos across various markets.

Although the aforementioned upsides have been aiding Nu Skin’s performance, the pandemic-induced hurdles cannot be ignored.

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