Nu Skin will cut more employees and pay less tax as it aims to earn up to $2.4 billion this year
Nu Skin executives said they hoped to make $100 million in US and international cuts in a restructuring.
Nu Skin, which began laying off employees this week, plans to continue cutting jobs as part of a restructuring it hopes will save $100 million in costs next year, as it also begins to transform the way it sells its products.
The Provo-based multi-level marketing company sells its supplement, wellness and beauty lines in the United States and internationally. Nu Skin faces challenges ranging from “prolonged lockdowns in mainland China” to “distractions” in the Middle East, Europe and Africa to widespread economic uncertainties, “especially in emerging markets like Latin America “, CEO Ryan Napierski said during an earnings call Thursday.
The company’s quarterly revenue fell 20% from the same quarter last year, from $704 million to $561 million, according to a Securities and Exchange Commission document filed Friday.
Mark Lawrence, Nu Skin’s chief financial officer, said he now expects 2022 revenue to be between $2.33 billion and $2.41 billion. In May, he predicted that revenue for the year would reach up to $2.62 billion.
The prediction came after Nu Skin raised prices by 5% on April 1 – which led to higher sales ahead of that increase, the company said.
Restructuring the business in the second half of this year will cost about $35 million to $45 million, with the goal of saving $100 million in 2023, Lawrence said on Thursday’s call.
The company decided on the cuts after going through “almost every line item” in its income statement, among other factors, Lawrence said. It closed Grōv Technologies, a vertical farming company located in Vineyard, laying off 121 employees who worked there and in its lighting division.
The timing of the layoffs, expected between the third and fourth quarters of this year, he said, “will largely depend on how we work with governments around the world and ensure that we are appropriate and that we take care of employees in the right way”. and do things according to the law.
A company spokesperson declined to comment on how many people will lose their jobs, but noted that the $100 million in cuts include more than cut positions, such as facilities and other expenses.
Nu Skin is widely known for its direct selling model. But Napierski said the company is making progress on its vision to instead be known for the way it designs beauty and wellness products — creating supplements and skincare that work together, and smart devices. who communicate with customers through applications.
The executives “are not giving up on our stated $500 million investment in technology,” Lawrence said.
Nu Skin’s first smart device, Lumispa iO, will be launched starting in the third quarter. The cordless cleanser will connect to an app that offers skincare coaching.
And this launch coincides with a change in the way Nu Skin products are sold, Napierski said.
Nu Skin’s direct sellers first purchase Nu Skin’s products themselves and then decide what price to mark up for their customers.
But those selling Lumispa iO, along with other “selected products,” will have to use a fixed price set by Nu Skin, which hopes the change will “promote affiliate productivity and retention,” Napierski said.
“This single pricing model will make it easier for our affiliates to sell it at this single price, we believe, worldwide,” he said.
In the second quarter, Nu Skin was able to reduce its tax rate to 20.2% from 27.1% in the second quarter of last year, Lawrence noted. The decline is due to “strong growth in the US market, which allowed us to use additional foreign tax credits to offset US income tax,” he said.
Leto Sapunar is a Report for America body member covering corporate responsibility and sustainability for the Salt Lake Tribune. Your donation to match our RFA grant helps him keep writing stories like this; please consider making a tax deductible donation of any amount today by clicking here.