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Skeletons In Plain Sight And Why Nu Skin Is Worth $10/Share
Nu Skin seems to be in trouble. At least going by articles on sites like Seeking Alpha. Recently we've seen:
Is Nu Skin Insolvent?
Skeletons In Plain Sight And Why Nu Skin Is Worth $10/Share
Nu Skin's Accounting: More Red Flags
Nu Skin has China syndrome as business falters
... and plenty of others.
When you consider that the share price of Nu Skin (NYSE:NUS) dropped from the January 2014 peak of $140 to a new 52 week low of near $40 in 8 months, yeah, you would think they might be a tad worried out there in Salt Lake City.
I like to think too that Diederik Van Nederveen had a small part in waking analysts up to the scam those Mormons were running in SLC.
The tip of the iceberg (in China) was the fine of $540,000 for selling products via direct selling that had only been approved for sale in retail stores, and for making claims about various products without sufficient proof. Now we learn they have more problems in China. From Shanghai Daily:
Quote:
Sep 02,2014
BEIJING, Sept. 2 (Xinhua) -- A five-month crackdown on pyramid schemes led to millions of yuan seized and thousands of arrests, the State Administration for Industry and Commerce (SAIC) said on Tuesday.
The campaign, carried out by the SAIC, the Ministry of Public Security and other authorities from March to July, cracked 1,446 pyramid schemes involving 3.7 billion yuan (606.8 million U.S. dollars).
A total of 3,911 people are being investigated and 64.4 million yuan has been seized.
The crackdown busted a number of major pyramid schemes with severe punishments delivered to core participants, the SAIC said.
Nu Skin wasn't mentioned in the investigation, to be fair. But people are waking up to these MLM scams over there. Could that be why Fortune reports that...
Quote:
Nu Skin, NUS -3.99% best known for its anti-wrinkle products, is similarly discovering China is a tough slog. Its shares took a beating (down 16% at last count) on Wednesday after it reported a huge drop in sales in greater China, its biggest market, and costs jumped. In that market, second-quarter revenue fell 12% to $229.9 million, while more ominously, the number of active reps fell 32%. The reps count is a leading indicator of sales because in direct-selling business, you don’t sell products without sales reps.
... "the number of active reps fell 32%"... Wow! Talk about being between a rock and a hard place. Nu Skin has run out of victims to sucker into their "opportunity" here in North America. So they move to the Far East to look for new suckers, and what happens? The pesky Chinese government starts meddling in their affairs.
So how does Nu Skin respond to a 32% drop in their sales force?
Quote:
Nu Skin China plans to fly 14,500 employees to Dubai for a corporate jaunt costing “hundreds of millions of dollars” – just two weeks after Chinese authorities hit the company with a fine of more than US$500,000.
Embarking on the largest corporate holiday ever held in the UAE, Nu Skin’s beauty product sales stars will pack jumbo jets, hotels and restaurants as they tour the country from Abu Dhabi to Sharjah for 10 days.
Read more:
Embattled Nu Skin China to embark on massive corporate jaunt to UAE | The National
Attachment 8360
Nu Skin sales people tour the Emirates. Courtesy Nu Skin
Un-friggin-believable!
Re: Skeletons In Plain Sight And Why Nu Skin Is Worth $10/Share
From Seeking Alpha....
Quote:
Doc Bunkum
So let's summarize...
*The share price of Nu Skin (NYSE:NUS) dropped from the January 2014 peak of $140 to a new 52 week low of near $40 in 8 months.
* Nu Skin was fined $540,000 for selling products via direct selling that had only been approved for sale in retail stores, and for making claims about various products without sufficient proof.
* Fortune magazine reports that the number of active reps fell 32% in the second-quarter.
So how does Nu Skin respond? By flying 14,500 Chinese employees to Dubai for a corporate jaunt costing “hundreds of millions of dollars” – just two weeks after Chinese authorities hit the company with a fine of more than US$500,000.
"Seventy-seven flights and 39 hotels in Dubai and Abu Dhabi will be needed to accommodate the salespeople, who have booked out Ferrari World for three days, and will enjoy two 8,000-person dinners at Yas Marina Circuit. Nu Skin has also booked two full Emirates charter flights." (Some people thought it was a joke as the press release was dated April 1, 2014, but far as I can tell, the trip did take place). In the last two years, Nu Skin's Chinese division has reportedly taken 6,000 delegates to Phuket in Thailand and 2,000 delegates on a cruise to Thailand, Malaysia and Singapore.
So where does the money come from if sales are down? It's obvious that $40 bottle of face paint Nu Skin sells must only cost a few cents on the dollar to make. Sandie Tillotson, Nu Skin co-founder, said as much in Adam Baker's banned book "Formerly Filthy Rich: My Scandalous Life with a Billionaire Cougar":
"I walked her over to the salon on Fifth Avenue, and watched while Frederic cut, colored, and teased Sandie’s micro-thin hair. Sandie whipped out her black credit card to pay the ridiculous $600 bill, and loaded up two shopping bags full of hair products. Of course, I would be the one lugging the bags. It was a long way back to the hotel but luckily we could cut through Central Park. Annoyed, I asked why she needed all the shampoo, since she owned a company that made every beauty product imaginable.
“Are you serious?” she said, laughing. “NuSkin creates all of their products for a huge return and markup, not for quality. I would never use their products!”
Makes a lot of sense. BTW, Nu Skin and their lawyers did a lot of work to have that book expunged from the internet. You likely won't find a copy on line. Except on this link if you want to read more about the inner workings of Nu Skin:
"My Scandalous Life with a Billionaire Cougar" - Adam Baker's Banned Book
As well as chapters from Diederik van Nederveen's unpublished book: "Trophy Husband - My Time Observing the 1% Feeding On The 99%" on this link:
"Trophy Husband #2 - My Time Observing the 1% Feeding On The 99%"
I made the above comment on the "Skeletons In Plain Sight And Why Nu Skin Is Worth $10/Share" article over on Seeking Alpha.
Nu Skin and their lawyers really pissed me off with their "book burning" attempts. I plan to let as many people as possible know that those two books and the "BOOK BURNING IN AMERICA: A TALE OF NU SKIN" article by Joe Alfieri are still available on the net and available to read on this site.
I know SBM likes a good scrap. It'll be interesting to see what happens when Nu Skin gets wind of the fact that their book burning attempts were for naught and that people are still reading about what a sleazy bunch of Mormons are running the company. At any rate, I still have plenty of backup copies of the material in case it goes AWOL again!
