Nu Skin Enterprises
|Traded as||NYSE: NUS|
|Industry||Personal care, nutraceuticals|
|Founder(s)||Blake Roney, Steve Lund, Sandie Tillotson, Nedra Roney|
|Headquarters||Provo, Utah, United States|
|Key people||Steve Lund (Chairman)
M. Truman Hunt (President, CEO, and Director)
Ritch N. Wood (Vice President and CFO)
|Revenue||US$ 2.170 billion (2012)|
|Operating income||US$ 340.844 million (2012)|
|Net income||US$ 221.645 million (2012)|
|Total assets||US$ 1.153 billion (2012)|
|Total equity||US$ 590.612 million (2012)|
|Employees||3,733 (Dec 2012)|
Nu Skin Enterprises is an American direct selling and multilevel marketing company which develops and sells personal care products and dietary supplements (under the Pharmanex brand). Nu Skin was founded in 1984 in Provo, Utah. The company originated in the U.S. and began its first international operation in Canada in 1990. One year later, the company began operations in Asia with the opening of Hong Kong. In 1996 the company listed on the New York Stock Exchange. The company markets its products in 53 international markets through a network of approximately 950,000 independent distributors.
In the 1990s, the Federal Trade Commission (FTC) investigated Nu Skin over complaints of its multilevel marketing practices. In 1992, Nu Skin reached settlements with 5 states which had accused the company of deceptive advertising and overstating the income earned by distributors. In 1994, following an investigation by the Federal Trade Commission (FTC), the company paid $1 million and signed a consent decree prohibiting it from making deceptive or unsubstantiated claims about its products. In 1997, the company paid an additional $1.5 million to the FTC to settle ongoing allegations of unsubstantiated promotional claims.
Brands and products
Under the Nu Skin and Pharmanex brands, the company develops and sells more than 200 personal care products marketed as helping people look and feel younger.
In the late 1990s, Nu Skin invested in Big Planet, a multi-level marketing company selling Internet services. The New York Times noted that Big Planet appeared to recruit people "even if they have little knowledge of the technology that they are supposed to be selling." A representative of the company stated: "I believe people who have never touched a computer before can become hugely wealthy in this business."
In 2009, Nu Skin began working with LifeGen Technologies, a genomics company based in Madison, Wisconsin, Nu Skin acquired LifeGen in December, 2011. LifeGen's genetic database aided in the development of Nu Skin's products, launching the ageLOC brand.
Business model and sponsorships
Nu Skin Enterprises' business model combines direct selling with multi-level marketing. Each distributor markets products directly to potential customers, and can also recruit and train customers to become distributors. Distributors are paid from the retail markup on products they are able to sell personally, as well as a performance bonus based on the sales of distributors they have recruited. Nu Skin states that it pays approximately 43 percent of its product revenue in sales compensation.
Since the beginning of the 1992–93 professional basketball season, Nu Skin has sponsored the Utah Jazz Dancers. Nu Skin also sponsors the Brigham Young University athletic program and the America's Freedom Festival at Provo, one of the nation's largest Independence Day celebrations.
The Force for Good Campaign was introduced in conjunction with the Nu Skin Epoch product line in 1996.[unreliable source?] A donation of 25 cents from the sale of each Epoch product is directed to preserve environments, languages, lifestyles, and traditions of indigenous people around the world.
Overhead and administrative costs for the Force for Good Foundation are paid for by Nu Skin, ensuring that all donations made to the Force for Good Foundation go directly to those receiving aid.[not in citation given] The Nu Skin Force for Good Foundation is based in Provo, Utah and is a registered 501(c)(3) non-profit organization in the United States.
Scrutiny and reception
In the early 1990s, Nu Skin was investigated by the states of Connecticut, Pennsylvania, Florida, Illinois, Ohio, and Michigan over allegations of misleading marketing practices. Ultimately, in 1992 the company settled with 5 of these states, admitting no wrongdoing but agreeing to pay the states' investigative costs, refund disgruntled distributors, and revamp its promotional practices. However, the Connecticut Attorney General did not agree to those terms and sued Nu Skin, charging the company with misleading its distributors and operating a pyramid scheme. Nu Skin admitted to no wrongdoing or violation of law and paid Connecticut $85,000 for consumer-protection programs as part of a settlement.
In 1997, the Attorney General of Pennsylvania sued Nu Skin, alleging that the company operated a pyramid scheme through a subsidiary, QIQ Connections. The Attorney General's office alleged that distributors paid for the right to market technology services which did not, in fact, exist. Nu Skin discontinued the QIQ subsidiary, allowing those who had paid QIQ to transition to Big Planet, another Nu Skin interest marketing Internet technology. The president of Big Planet described the pyramid-scheme allegations as a matter of "a few distributors who in their enthusiasm have been overzealous in some of their marketing activities."
In 2012, Stanford University sent a cease and desist letter to halt the use of the name of one of its researchers in Nu Skin's advertising claims.Stanford later released a statement regarding its long-standing, research-based relationship with Nu Skin explaining that the letter was sent to Nu Skin as a request by Stuart Kim, PhD, a professor at Stanford. Kim requested in the letter that his name be removed from Nu Skin's marketing materials as he is no longer involved with research funded by Nu Skin, however, the letter did not recognize the existing research relationship between Stanford and Nu Skin. Stanford apologized for any misunderstandings that may have resulted. At the same time, Andrew Left's Citron Research issued a report "stating that Nu Skin's sales model on mainland China, the fastest growing market in direct-selling, amounted to an illegal multi-level marketing scheme. The report sent the company's shares down nearly 10 percent." Nu Skin dismissed the claims calling its sales model in China kosher and had no plans to change its business model in China.
Evaluation of supplements
The Pharmanex LifePak Anti-Aging supplement was tested by ConsumerLab.com, and was reported as failing the overall review due to failing to clearly indicate its total Vitamin A content per FDA requirements.
In 2011, two Utah-incorporated business entities linked to top executives of Nu Skin each made a $1 million contribution to Restore Our Future, a "Super PAC" established by former aides to US presidential candidate Mitt Romney to support his bid for the White House.
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