Share of Nu Skin Enterprises Inc. dropped Wednesday after the company offered a weak forecast for the fourth quarter, as its sales in China have slumped following a government investigation.
Nu Skin sells skin care and nutritional products directly to consumers. The company said Wednesday that its revenue fell 30 percent in the third quarter as revenue in China, Hong Kong and Taiwan decreased by a combined 50 percent. In January a Chinese state-run newspaper published a report that compared the company's sales coaching methods to "brainwashing" and suggested the company is a pyramid scheme. Regulators then ordered an investigation into Nu Skin.
The company said in April that it would resume corporate-hosted business meetings and would accept applications for new sales people. Its sales in the second quarter fell 12 percent, far short of its third-quarter slump. Nu Skin said it is working to improve its results in China, but said the stronger U.S. dollar will also hurt its sales in the fourth quarter.
The company forecast net income of 72 to 77 cents per share in the fourth quarter, including a charge of 8 cents per share related to debt refinancing, on revenue of $590 million to $610 million.
FactSet says analysts expect net income of $1.01 per share and $659 million in revenue.
Shares of Nu Skin Enterprises lost $8.20, or 16.3 percent, to $42.22 in morning trading. Earlier the stock fell to $39.46, its lowest price since February 2013.
The company said Wednesday it earned $68.3 million, or $1.12 per share, in the third quarter on $638.8 million in revenue. The Provo, Utah, company said sales in South Korea and Japan improved, but revenue in other regions declined.
Zacks Investment Research says analysts expected net income of 93 cents per share and $628.5 million in revenue.
Nu Skin shares have fallen 64 percent since the beginning of the year.
Elements of this story were generated by Automated Insights using data from Zacks Investment Research. NUS stock research report from Zacks.
Keywords:Nu Skin Enterprises,Earnings Report