Direct-seller Nu Skin Enterprises Inc. had a drop in net income for the first quarter to $3.3 million, from $36.3 million in the prior-year period.
The drop is due to a $32 million noncash charge, or 36 cents per share, related to the Tokyo District Court’s ruling in February regarding customs fees for Nu Skin importing products.
Net income per diluted share was 6 cents for the first quarter, compared with 62 cents for the same quarter in 2015. Excluding a noncash charge associated with the Japan customs ruling, earnings per share were 42 cents, above analysts’ predictions of 37 cents. Nu Skin’s stock closed at $39.50 on April 28, before earnings were announced.
Sales for the quarter ended March 31 were $471.8 million, down 13.2 percent from $543.3 million in the prior-year quarter. Foreign currency effects drove revenue down 5 percent, the company said.
The company is predicting $560 million to $580 million in revenue for the second quarter, with 75 cents to 79 cents in EPS, with full-year EPS of $2.29 to $2.49, or $2.65 to $2.85, when exclusive to what the Japan customs charge. Previously, NuSkin predicted 2016 revenue of $2.99 billion to $2.33 billion, with EPS estimated at $3.25 to $3.40.
“At first blush, one might look at the first-quarter data and argue that it may be a bit difficult with us to post growth…but we’ve been pleased with the sales activity in March and April,” said chief executive officer Truman Hunt on the company’s earnings call.
Based in Provo, Utah, the company develops skin-care products under the Nu Skin and AgeLoc brands, and as well as antiaging supplements. Nu Skin also makes hair-care, body-care, oral-care, sun protection and cosmetics products.
“Our first-quarter performance was in line with our expectations and we are optimistic about the impact of upcoming product launches,” said Hunt. “We are seeing an enthusiastic response to the introductions of AgeLoc Youth and AgeLoc Me, and we anticipate that these product launches will drive core business improvement throughout the remainder of 2016.”
In another legal development, Nu Skin is set to pay $47 million to settle a lawsuit that alleged the business made misleading statements about its China business and operated a pyramid scheme in the country. Nu Skin’s insurers are expected to fund the payment, according to a filing with the U.S. Securities and Exchange Commission.
Greater China makes up the largest portion of Nu Skin’s sales, bringing in $158.7 million for the first quarter. Nu Skin anticipates rolling out AgeLoc Me in China over the summer with a limited-time offer, and the line is scheduled for a full-scale China launch in the fourth quarter.