Nu Skin Enterprises shares fell as much as -20% on Wednesday, after the company expressed concerns over headwinds from China’s increased scrutiny on health products.
The company, which develops and sells personal care products, revealed that it is adjusting its guidance for the year, mainly due to a dampened revenue outlook in Mainland China following the government’s 100-day campaign to review and scrutinize the health products and direct selling industries.
The increased scrutiny on the direct selling industry has reportedly led to a tightening of regulations on sales meetings - something that could adversely affect customer sentiment, as hinted by NU Skin CEO Ritch Wood. China accounted for 33% of Nu Skin’s revenue in 2018.
The company is scheduled to release its second quarter earnings reports on August 6. But as of now, Nu Skin is expecting its second-quarter earnings to range between 82 and 84 cents per share – down from its prior forecast of 91 to 98 cents per share. It now expects revenue between $622 million and $623 million, compared to its previous expectation of $660 million to $680 million.
Nu Skin has also lowered its full-year guidance. It now forecasts an earnings per share range of $3.20 to $3.35, compared to prior estimate of $3.80 to $4.05 a share. Its full year revenue expectation now sits between $2.48 billion to $2.52 billion, which is a range lower than its previous prediction of $2.76 billion to $2.81 billion.