Nu Skin says impact of China sales ban makes forecast ‘difficult’

Nu Skin reveals first quarter results showing continued signs of very strong growth, but the company says that forecasts for the full year are difficult following the ban on sales in China.

During the quarter sales rose by 24% to reach $671.1m, although revenue was also negatively impacted by foreign currency translations by 4%.

Net income rose from $54.3m to reach a total of $62.3m, while operating income was up from $82.6m to $101.2m.

Second quarter will be one to watch...

"Our results are particularly encouraging given the business disruption we experienced in China during the first quarter, as well as currency headwinds we faced in many markets,” said Truman Hunt, president and CEO.

“Our results are particularly encouraging given the business disruption we experienced in China during the first quarter, as well as currency headwinds we faced in many markets. With respect to China, our team took aggressive, proactive steps to address media and regulatory concerns in a timely manner.”

The CEO went on to state that the ban in China during the first quarter will have a negative effect on the full-year 2014 results and specifically the second quarter, an announcement that caused analysts and market experts to voice concerns and lower their forecasts for the business.

Greater China sales still surge dramatically

On a regional basis, the results showed that in the Greater China region revenues were still up by 63% to $278.9m, a figure that reflected a 2% positive impact from currency translations.

In North Asia revenues for the quarter increased by 5% to $195.5m, which in the Americas revenues increased by 6% to $71.2m, while in South Asia/Pacific revenues also increased by 6% to $71.2m and in the EMEA region sales were up 9% to $45.6m.

"Because we are only a few days into the recommencement of promotional activities in China, it is difficult to forecast how the business will perform," said Ritch Wood, chief financial officer.

"Ideally, we would have more time to monitor the direction of the business in China before providing updated guidance. That said, our current estimate of second-quarter revenue would be around $700 million."