Sales: $498 million
Sales:$498 million. Corporate sales: $1.16 billion. Net income: $43.7 million.
M. Truman Hunt, president, chief executive officer; Blake Roney, chairman of the board; Steve Lund, vice chairman of the board, executive director of Nourish the Children; Sandie Tillotson, senior vice president; Daniel Chard, executive vice president of distributor success; Scott Schwerdt, president, Americas, Europe and Pacific; Ritch Wood, chief financial officer; D. Matthew Dorny, general counsel, chief legal officer.
Joseph Y. Chang, chief scientific officer and executive vice president of product development.
Chief Scientific Officer:
Chief Marketing Officer:
Nu Skin 180º Anti-Aging Skin Therapy System, Galvanic Spa System II, Tru Face Essence Ultra, Epoch.
Major Products:Tru Face Essence Ultra, Epoch Baobab Body Butter. To be launched: Anti-aging skin treatments.
Comments:This global direct selling company reported a 4% rise in sales. According to Nu Skin’s 2007 annual report, 2007 was a turnaround year for the company. Sales fell in 2006, but Nu Skin’s efforts to generate renewed growth during 2007 were successful. For the year, the company generated a 4% revenue growth, achieving its second-highest revenue year in Nu Skin’s 23-year history.
The company concluded 2007 with sales of $1.16 billion. According to the company, strong performances in most of its markets contributed to these results, including successes in South Korea, the U.S., Eastern Europe, Southeast Asia and Hong Kong. These markets have been able to capitalize on strong product initiatives, including the Galvanic Spa System II, an in-home spa system focused on reducing the visible signs of aging. In addition, the company’s flagship products, the Pharmanex LifePak multivitamin line and the Nu Skin 180 Skin Care System, continued to hold consumer loyalty.
Nu Skin’s 2007 revenue met its original growth target of 3-5%, notwithstanding larger than anticipated declines in Japan and China. However, its earnings per share (EPS) growth fell short of target. This was due to a lower-than-anticipated gross margin as its revenue mix shifted from Japan to lower-margin markets, and higher-than-expected losses in unprofitable markets, especially China. According to the company, it made significant steps to address these issues in the second half of 2007, putting it on a path to enjoy strong EPS growth in 2008.
Key 2007 re-structuring steps included management changes in key markets of Japan and China, including hiring Gary Sumihiro in Japan to lead business there and 18-year Nu Skin veteran Andrew Fan to head China. In the fourth quarter of 2007, Nu Skin simplified its operations in China by closing approximately 70 stores and reduced its corporate headcount by more than 50%. The company also closed its Brazil operations in mid-2007, with an expected savings of approximately $2 million a year.
The company also launched a new strategic positioning to its distributor leaders at its global convention in September 2007, and is rolling it out globally to its 47 markets in 2008. The initiative includes an updated image and identity for the company.
On the personal care side, Nu Skin has spent the last several years collaborating with scientists at Purdue University to identify an enzyme in the skin known as arNox, which has been shown to be an important contributor to skin aging. This discovery is leading to novel approaches to skin care and company scientists are developing new products based on this new platform with a rollout in key geographies of Japan, Greater China, the Americas and Europe in the next year.