We added Nu Skin (NUS) to the Hedgeye Consumer Staples Best Ideas list as a SHORT.
SHORT NUS – 11/11/15 Call Replay and Slides
Link to Audio Replay
Link to Video Replay
Link to Slide Deck
On Wednesday November 11th, we walked through our short thesis on Nu Skin (NUS), a multi-level marketing company that distributes primarily skin care product. Below is a brief overview of the material that we went through.
China is the largest region by revenue for NUS, representing 33% in 4Q15. It is also the region that had the sharpest decline in both sales leaders and revenue from 2013 to 2014.
LACK OF MARKET SHARE
Nu Skin is a small player in the global Beauty and Personal Care category, with only a 0.3 value share.
VitaMeal is becoming increasingly meaningful to the NUS income statement, on both the top and bottom line.
The money flows of the charities are inviting scrutiny.
Lackluster inventory management, inventory levels are currently 1 standard deviation above the long-term average.
With the current trajectory of downward trending sales leaders and declining revenue per sales leaders NUS’s business model is not sustainable.
Please call or e-mail with any questions.