Beauty Beat: Interest in Kanebo Acquisition Intensifies ... Nu Skin Earnings Gain 12.3%

Nu Skin Enterprises Inc. reported robust second-quarter profits on a 9 percent revenue gain.

For the period ended June 30, earnings increased 12.3 percent to $22.8 million, or 32 cents per diluted share, from $20.3 million, or 28 cents per share, as sales climbed to $310.1 million from $284.2 million. Earnings results include the benefits of currency exchange.

For the six months ended June 30, earnings grew 16.4 percent to $40.5 million, or 57 cents per diluted share, from $34.8 million, or 47 cents per share, a year prior.

Overshadowing the strong results were concerns of the impending direct-selling regulations in China. In a conference call, Truman Hunt, president and chief executive officer, laid out the company's plans to ease into the transition of direct selling in that country.

"We continue to believe that China will very quickly become one of the top three direct-selling markets in the future. Our business in China was built with eventual direct selling in mind, but because we are aware of potential transition challenges, we have been very proactive in educating our sales force in anticipating becoming a direct seller. Whenever changes are made, there is always an absorption period required, but I believe our transition in China will be considerably smoother than what some of our competitors faced."

The worry, though, was simply in anticipation. Nu Skin's revenue in Greater China still increased 8 percent in the second quarter, to $64.1 million from $59.1 million.

Due to some currency volatility in Japan, the company revised its second-half guidance from 7 cents per share to 4 cents per share. The adjustment, however, does not effect its year-end guidance. The company expects third-quarter earnings per share of 29 to 30 cents, and fourth-quarter earnings per share of 32 to 34 cents.
— Amy S. Choi

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