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(Steve Lund (left) and Blake Roney, who started the beauty products company NuSkin, marked the 25th anniversary of the company at a short celebration at the company's Provo headquarters on Tuesday, June 9, 2009. The Chinese government slapped fines on the company, but stocks were rebounding as the investigation into NuSkin sales practices wrapped up. Paul Fraughton/ The Salt Lake Tribune)
Nu Skin shares slide despite record revenue, earnings

Operations » Due to Chinese investigation — and despite record revenue, earnings — company delays annual report.

By Tom Harvey

| The Salt Lake Tribune

First Published Mar 03 2014 09:48 am • Last Updated Mar 03 2014 06:25 pm

Nu Skin Enterprises of Provo reported record fourth quarter and annual results but its shares were falling early Monday after it said earnings will be affected by an ongoing investigation into its operations in China.

Nu Skin’s shares were down nearly 5.4 percent in early trading after it issued a press release with earnings results.

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The multi-level marketer of anti-aging and other personal-care products said revenues were a record $1 billion for the fourth quarter, 82 percent more than the same period of 2012. Annual revenue was $3.17 billion or 49 percent greater than the previous year.

Much of growth was driven by China, where fourth-quarter revenue increased 248 percent. But China remains a question mark for Nu Skin after several agencies reported they were looking into allegations the company was operating in an illegal manner.

One of the investigations was announced after the People’s Daily newspaper reported that the Nu Skin’s operations appeared to be a pyramid scheme. Nu Skin and other multi-level marketing companies are allowed to engage independent distributors to sell products directly to consumers but they are prohibited from their normal practice of paying commissions for sales to networks of distributors who are recruited into the company.

Nu Skin has suspended promotion meetings and is not accepting applications for new distributors, actions that will negatively affected its growth there, the company said.

Because of an ongoing internal investigation into its Chinese operations, Nu Skin said will not be able to file its annual report to the Securities and Exchange Commission by the Monday deadline.

Nu Skin reported net income of $125.2 million or $2.13 a share for the fourth quarter, compared to $59.2 million or $1.01 a share for 2012.

Annual net income for 2013 was $364.8 million or $6.23 a share compared to 2012’s $221.6 million or $3.66 a share.


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Twitter: @TomHarveySltrib

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