Nu Skin, which started laying off employees this week, expects to continue to cut jobs in a restructuring it hopes will save $100 million in costs next year — as it also begins to transform how it sells its products.
The Provo-based multilevel marketing company sells its supplements, wellness and beauty lines in the U.S. and internationally. Nu Skin is facing challenges from “extended lockdowns in mainland China” to “distractions” in the Middle East, Europe and Africa to widespread economic uncertainties, “particularly in emerging markets like Latin America,” CEO Ryan Napierski said in an earnings call Thursday.
The company’s quarterly revenue decreased 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 anticipates 2022 revenue to land between $2.33 to $2.41 billion. In May, he had predicted the year’s revenues would reach up to $2.62 billion.
That prediction came after Nu Skin boosted its prices by 5% on April 1 — which led to a surge in sales ahead of that increase, the company said.
Restructuring the company in the second half of this year will cost approximately $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 “nearly every line item” in its profit and loss statement, among other factors, Lawrence said. It has closed Grōv Technologies, a vertical farming company located in Vineyard, laying off 121 employees that worked there and in its lighting division.
The timing of the layoffs, scheduled between the third and fourth quarter of this year, he said, “will largely be dependent on how we work with governments around the world and make sure we’re proper and taking care of employees in the proper way and doing things according to the law.”
A spokesperson for the company declined to comment on how many people will lose their jobs, but noted that the $100 million in cuts includes more than eliminated 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 recognized for the way it designs beauty and wellness products — creating supplements and skin care that work together, and smart devices that communicate with customers via apps.
Leaders are “not backing off our stated investment of $500 million in technology,” Lawrence said.
Nu Skin’s first smart device, Lumispa iO, will be introduced beginning in the third quarter. The cordless cleanser will connect to an app that offers skin care coaching.
And that launch coincides with a change to how Nu Skin products are sold, Napierski said.
Nu Skin’s direct sellers first buy its products themselves, and then decide how much to mark them up for their customers.
But those who sell Lumispa iO, as well as other “select products,” will be required to use a fixed price set by Nu Skin, which hopes the change will “promote affiliate productivity and retention,” Napierski said.
“This one price model will make it easier for our affiliates to sell it at that one price, we believe, around the globe,” he said.
In the second quarter, Nu Skin was able to reduce its tax rate to 20.2%, compared to 27.1% for the second quarter of last year, Lawrence noted. The decrease was due to “the strong growth in the U.S. market, which enabled us to utilize additional foreign tax credits to offset U.S. income taxes,” he said.
Leto Sapunar is a Report for America corps member covering business accountability and sustainability for The Salt Lake Tribune. Your donation to match our RFA grant helps keep him writing stories like this one; please consider making a tax-deductible gift of any amount today by clicking here.