Q3 2024 Nu Skin Enterprises Inc Earnings Call
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Thank you for standing by my name is spread out and I will be your conference operator today.
This time I would like to welcome everyone to the Nu skin Enterprises Q3, 2020 earnings conference call. All lines have been placed on mute to prevent any background noise. After just speakers remarks, there will be a question and answer session. If you would like to ask a question. During this time keep you press the star followed by the number one.
On your telephone keypad, if you would like to withdraw your question you may do so by pressing star one again.
Speaker Change: I would now like to hand, the conference over to Scott Pond, Vice President of Investor Relations you may begin.
Scott Pond: Thanks, and good afternoon, everyone today on the call with me are Ryan appear ski President and CEO and James Thomas CFO on today's call comments will be made that include forward looking statements. These statements involve risks and uncertainties and actual results may differ materially from those discussed or anticipated.
Scott Pond: Please refer to today's earnings release, and our SEC filings for a complete discussion of these risks also during the call certain financial numbers may be discussed that differ from comparable numbers obtained in our financial statements.
Scott Pond: We believe these non-GAAP numbers to assist in comparing period to period results in a more consistent manner. Please refer to our investor website for any required reconciliation of these non-GAAP numbers and with that I'd like to turn the call now over to Ryan.
Ryan: Thanks, Scott and Hello, everyone. Thanks for joining our call I'll start by providing a performance summary on Q3 sharing thoughts on our near term priorities to improve operating performance followed by an update on our longer term strategy to reenergize growth, we continue to evolve our core nu skin traditional direct selling business towards a more expansive integrated.
Ryan: Beauty wellness and lifestyle ecosystem, including our <unk> businesses.
Ryan: The third quarter results were in line with our guidance range, reflecting continued headwinds in our core Nu skin business, partially offset by ongoing strong performance from our <unk> segment we.
Ryan: We delivered growth in a handful of markets in Latin America, and southeast Asia as well as impressive growth from mainly our affiliate marketing platform.
Ryan: We continue to face pressures in several of our larger markets, including South Korea, and China were ongoing macroeconomic factors are impacting consumer spending.
Ryan: I was recently in China with our team evaluating future opportunities in the market and continue to believe in the long term potential of this market. Despite the near term headwinds.
Ryan: In the U S, where the direct selling industry faces ongoing pressures and many companies are evolving their business model to address the changing commercial landscape more towards social media driven product discovery and growing influence or an affiliate marketing we are introducing a new sales performance plan. This month and are exploring innovative ways to make it.
Ryan: Even easier for our affiliates to share new skin products via social media links both of which I will discuss more in just a moment.
Ryan: Our <unk> segments exceeded forecast and closed another record quarter up more than 20% year over year led by <unk>.
Ryan: Mainly as our affiliate marketing platform that enables approximately 1200 brands and retailers.
Ryan: To connect with consumers by a more than 100000 everyday influencers across most social media platforms. We've invested in the development of <unk> over the past three years as their creator economy continues to expand and see tremendous potential looking forward.
Ryan: Manufacturing also continues to perform well servicing a broad array of leading beauty and wellness brands across traditional CPG direct to consumer and retail.
Ryan: As we navigate the broader market uncertainties in the near term, we will be accelerating our efforts to drive cost efficiencies and improve margins and cash flow, even under a scenario where topline headwinds persist into 2025.
Ryan: To that end our near term priorities are focused on the following three areas first on the product side, we will be accelerating our product portfolio optimization efforts that began earlier this year and are pleased with progress made to date of reducing approximately 20% of our sub optimize skus globally in 2025.
Ryan: Five we anticipate reducing another 30% of lower low performing skus, which will lead to more than 50% portfolio consolidation by year's end coupled with the work we've been doing on lowering raw material and manufacturing costs. We anticipate 150 to 200 basis point gross margin improvement to our.
Ryan: Our core Nu skin business by the end of 2025.
Second selling expense in the core has risen over the past several quarters due in large part to shifts in both geographic market and sales force mix. The new sales performance plan I mentioned earlier combines the best of affiliate marketing with the scaling power of our leadership driven business model by promoting healthy and sustainable growth in both direct.
Ryan: <unk> sales and team building it places an enhanced focus on product selling and referrals for others, who do the same.
Ryan: We will start by introducing this in North America, and South Korea this quarter with other markets to follow next year.
Ryan: These initiatives will help to improve channel activation, while optimizing selling expense in the core as we work towards our historic 40% target by years end in 2025.
Ryan: And third we'll extend our operational optimization efforts to all underperforming markets as we strive to ensure balanced profitability across all market segments. In 2025, we initiated this process in Argentina earlier, this year and have experienced significant improvements in both top and bottom line as we simplified.
Ryan: And focused our business in the market, we anticipate improving annual profitability beyond $20 million across developing markets as we work towards $50 million in annualized G&A savings over the coming year.
Ryan: Together, we believe these three near term operational optimization initiatives will enhance our ability to simplify and focus our business on the things that matter. Most in terms of returning our business to growth, while ensuring operational profitability.
Ryan: Longer term, we remain focused on building out our enterprise vision of becoming the world's leading beauty wellness and lifestyle ecosystem. We've introduced several new initiatives that we believe will lead us towards this long term vision, including one the introduction of mine 360 at our east and West live events this past quarter with <unk>.
Ryan: Mobile market launches continuing over the next few quarters.
Ryan: Cognitive health is a rapidly growing consumer category reported to be $9 billion globally and growing at 13% per year. While this burgeoning category is new to overall consumer behavior. We believe it will attract a new segment of customers to new skin in the future.
Ryan: Second in addition, our product pipeline remains robust and we are also exploring new innovations in our nutrition supplement business along with technologies that help demonstrate their efficacy our nutrition product lines, including farm <unk> life pack G. III and others also hold some of the highest customer acquisition and retention.
Ryan: Rates in our portfolio, we anticipate some of these new innovations to hit the market in late 2025, and we will discuss with you more in upcoming quarters.
Ryan: At live we also introduced our explore exploration into integrated brand building with our sales force as we strive to broad new skins accessibility wherever customers seek to find us.
Ryan: We're very early in the exploration of efforts, but are beginning to see promising indicators as customers access our products by a third party marketplaces and search engine advertisements for instance, approximately 80% of those purchasing via online ads are customers, who found their way back to new skin to place an order through an advertisement.
Ryan: We believe there is untapped potential in invigorating customer activation and retention through integrated brand building.
Ryan: Fourth we will be releasing a beta version of <unk> initially in our U S to our U S brand affiliates later this month, our affiliates are authentic micro influencers and we believe that the combination of mainly at Nu skin will further enhance their ability to engage with customers socially the app will improve their ease of <unk>.
Ryan: <unk>, new skin products as well as more than 200, additional beauty wellness and lifestyle brands on the <unk> platform.
Ryan: And lastly, we continue to explore future market expansion into India. The world's second largest population and one of the fastest growing economies in the world India is a complex market, but holds significant potential as we strive to introduce new skin to this highly entrepreneurial beauty and wellness conscious $1 $3 billion billion person.
Ryan: Population anticipated in late 2025.
Ryan: So in summary, despite the challenging operating environment, we are making progress in several areas of our vision over the immediate term, we are pushing harder to drive operational efficiencies, which will help to improve profitability and cash flow as well as free up additional resources to support our key growth initiatives. We also continue to evolve our business.
Ryan: <unk> model as well as overall branding efforts to regenerate healthy and sustainable growth. We remain focused on executing our long term vision of becoming the world's leading integrated beauty wellness and lifestyle ecosystem. So with that I'll turn the time over to James to cover Q3 in more detail along with guidance and then we'll open it up for questions James.
James Thomas: Good afternoon, and thank you for joining us to discuss <unk> financial results for the third quarter I will provide a brief update and then speak to Q4 and 2024 guidance. Our performance reflects our commitment to operational efficiency through our company wide efforts to optimize expenses across the P&L, while navigating the macro.
James Thomas: Macro environmental uncertainties and weak consumer sentiment and the direct sales industry before we dive into details I am pleased to share that we are on track with our plan to reduce skus by 30% in 2024 and are accelerating this effort in Q4 to simplify our portfolio and focus on higher margin products within our core business and our.
James Thomas: Developing markets were beginning to see positive margin improvements as we pivot toward a more profitable product mix, while we're still in the early stages of this transition in our lower tier markets, we have implemented strategic steps to enhance the margin targets reduce our operating overhead and streamline the business opportunity with a more attractive price target and commission structure to.
James Thomas: Improved bottom line returns. In addition to these changes we are progressing well with our 2020 for cost efficiency initiatives and are on track to reach the upper end of our previously announced G&A savings targets of $45 million to $65 million.
James Thomas: Now onto third quarter results, we posted revenue of $431 million, which.
James Thomas: Which landed within our prior guidance range and included a negative foreign currency impact of three four.
James Thomas: 4% or $16 $7 million revenue for the prior year quarter was $498 8 million.
James Thomas: Third quarter earnings per share of <unk> 17 also landed within our previous guidance range. This compares to negative <unk> 74.
James Thomas: Or 56 exclude.
James Thomas: Excluding an inventory write off in the prior year quarter.
James Thomas: Our gross margin was 71% compared to 58, 6% or 71, 8%, excluding an inventory write off in the prior year quarter gross margin for the new skin core business was 76, 5% compared to 61, 8% or 76, 8%, excluding excluding the inventory.
James Thomas: We write off a reduction of 30 basis points due to geographic revenue shift from mainland, China and South Korea.
James Thomas: Selling expense as a percentage of revenue was 39% compared to 37, 6% in the prior year quarter selling expense for the core Nu skin business was 43, 5%, which was elevated due to our first in person sales convention since COVID-19 compared to 41, 7% in the prior.
James Thomas: Year periods.
James Thomas: General and administrative expenses declined approximately $15 million year over year due to the continuation of our cost efficiency program, helping bring expenses more in line with current revenue levels as a percent of revenue G&A for the quarter was 26, 9% compared to 26, 2% in Q3 of 2023.
James Thomas: Our operating margin for the quarter was four 2% compared to negative five 3% or seven 9%, excluding an inventory write off interest expense was $6 5 million for the quarter compared to $7 5 million in the prior year.
James Thomas: From a cash utilization perspective, we made solid progress in strategically reducing inventories across our product portfolio, which contributed to a healthy $31 4 million in operating cash flow. This quarter. Additionally, we reduced our outstanding debt by $25 million and paid $3 million in dividends.
James Thomas: We did not repurchase any stock this quarter and now have $162 $4 million remaining under our current authorization.
James Thomas: Our tax rate for the quarter was 37, 6% compared to negative seven 3% or 10, 1%, excluding the inventory write off.
Speaker Change: Shifting attention now to guidance.
Speaker Change: Given the results of the first nine months of 2024 and the current state of the business. We are expecting 2020 for revenue in the $170 billion to $173 billion range, we anticipate earnings per share of negative $2 32.
Speaker Change: To negative $2 22.
Speaker Change: Our adjusted earnings of <unk> 65 to 75.
Speaker Change: Our guidance now assumes an increased foreign currency headwinds of approximately 3% to 4%.
Speaker Change: We are projecting fourth quarter revenue of $410 million for $445 million.
Speaker Change: Assuming a foreign currency headwind of approximately 1% to 2% with reported earnings per share of negative <unk> <unk>.
Speaker Change: Our one two.
Speaker Change: Sorry, <unk> or adjusted earnings of 19 to 29, excluding a planned cash restructuring charge of $15 million to $20 million to align our operating cost to be more in line with our revised outlook on current revenue as.
Speaker Change: As you can see we are occur.
Speaker Change: Acutely focused on optimizing our operations to strategically focus our resources on driving the key initiatives that Brian discussed, which align to our long term vision of becoming the world's leading beauty wellness and lifestyle ecosystem, we remain committed to improving operating margins as we work through our enterprise transformation by improving overall.
Speaker Change: Gross margin contribution margin and operating margin in 2025 via these key initiatives, which will drive improve shareholder return in the mid to long term and with that operator, we will now open up the call for questions.
Speaker Change: Okay.
Speaker Change: Thank you we will now begin the question and answer session.
Speaker Change: Have dialed in and we would like to ask a question. These precious time line on your telephone keypad. Please go ahead and join the queue.
Speaker Change: I would like to withdraw your question. Thank you better star one again once again these precious Taiwan to join the queue.
Speaker Change: Your first question comes from the line of.
Speaker Change: Jason Bender with Citigroup. Please go ahead.
Jason Bender: Okay. Thanks, operator, and afternoon, guys I wanted to start high level, I mean, clearly theres been a lot of initiatives underway to stabilize the quarter rec selling business, whether that be new operating models, new product introductions leveraging E com marketplaces.
Speaker Change: And I guess.
Speaker Change: Putting that all together in context of what is still a very challenging macro environment.
Speaker Change: How should we be thinking about the timeline for stabilizing the core Nu skin business is that something that could happen in 'twenty five based on the initiatives that you have underway or given how long. It takes for some of those some of those projects to build traction is it really more like a 26.
Speaker Change: Story at this point.
Speaker Change: Yes, Jason that's a good question I'll comment maybe <unk>.
Speaker Change: James can add his context as well how we're looking at.
Speaker Change: The business so the way I kind of split it right now is we've got the near term.
Speaker Change: Which obviously is kind of a prolonged state of decline across the business and in most sectors and therefore, our primary focus right now is ensuring that we're getting is frankly is simplified and focused as we can operationally across the product portfolio, even our selling.
Speaker Change: Hence optimization as I mentioned and then developed.
Speaker Change: Developing markets, where profitability hasn't been as great. So very focused on that.
Speaker Change: And really.
Eliminating wasteful or less effective cost in order for us to then take that money and invested in new initiatives that are both <unk>.
Speaker Change: Direct it towards like the new sales performance plan I mentioned directed towards channel activation.
Speaker Change: But also these new initiatives like integrated brand building.
Speaker Change: Social sharing and alike, so transformational and I do think those are more mid to long term. So I think when we look into 2025 trying to read out what's going to happen hard to know with political landscapes here in the U S and the like but inflation seems to be leveling off in calming down, which we believe is.
Speaker Change: Going to help with more premium beauty and wellness.
Speaker Change: As we look into later 2025, I think we're still a few quarters away from that so it's not as transparent.
Speaker Change: The futures not as transparent now on that side, but I think for us when we look at the model, where we're saying hey, it's going to be near term and I think moving into early part of 'twenty five I think it's still going to be rough.
Speaker Change: Towards the second half.
Speaker Change: Have quite a few initiatives that we'll be talking about next quarter that will come in will have a little more transparency post election here in the U S, where we think the economy will go and we'll see kind of how that plays out in late 2025 for US now, though it's very cost optimization focus near term.
Speaker Change: While we then lean into these innovations that are a little more mid mid to long term focus James would you any other thoughts.
James Thomas: I would say chase and with with what we saw with where we finished Q3 and where we are forecasting Q4.
Speaker Change: We're showing that softness in the back half of this year.
Speaker Change: And going into 'twenty, five we're being cautious about our forecast we will give guidance at our.
Speaker Change: After the end of the year, how we're looking at 25, but in the meantime, what we're doing is we're really working under through the P&L to make sure from an operating profit perspective that we're maximizing all of those opportunities and trying to really forecast.
Speaker Change: Profitability going forward.
Speaker Change: Got it I appreciate that color and then just switching gears.
Speaker Change: On the other hand rise just absolutely continues to be a bright spot. So I was wondering if you could provide a little additional context, particularly on the non manufacturing side I know you mentioned.
Speaker Change: But just.
Speaker Change: How are the various pieces like namely in beauty bio contributing and bigger picture I know you've talked about rise mixing up to 2025% of sales by 25. It seems like you could get there much sooner given the decay in the direct selling side. So maybe just provide some perspective on how to think about.
Speaker Change: The organic growth rate across both manufacturing and other particularly in context, the manufacturing growth did slow pretty meaningfully this quarter on what was a difficult comp.
Speaker Change: Yeah, Yeah, no I think rise is doing really well as you said and we continue to.
Speaker Change: To invest in that platform I mean, it is very much an investment.
Speaker Change: In that platform as we as we look to allocate resources there.
Speaker Change: Maybe Lee if you break it down manufacturing is kind of that steady business that for us as strategic I mean, a lot of people ask why do we hold manufacturing I'll be honest I mean, we have we service hundreds of other <unk>.
Speaker Change: Customers across multiple channels from DTC CPG traditional retail e-commerce.
Speaker Change: It's really interesting for us to be able to observe trends.
Speaker Change: And be able to see how innovation is going into market and what channels are winning frankly, so for us. It's more it's more than just an operational vertical play. It really is helpful and insightful in the beauty and wellness space, but.
Speaker Change: But yes. It continues to go well, we need to continue to invest to fuel that growth mainly has been continues to be a really interesting investment I mentioned, it's only been three years. The business continues to perform well it plays right in the sweet spot of the creator economy.
Speaker Change: And there's a lot of interest in that sector with recent deals. There. So we will continue to invest on mainly we want to make sure. It has the best opportunity for continued growth. There. We do have brands as you mentioned the likes of beauty bio we have investments in a few other brands as well and we'll see how those go.
Speaker Change: I mean, I think the world of Omni channel is trend is transitioning now.
Speaker Change: We watch companies like Ulta, and others, Sephora et cetera, Theres a lot of a lot of shifting and how their business mix goes from bricks and mortar to online and I think we're experiencing and learning the same thing.
Speaker Change: We as we play with these businesses and understand them better I think beauty vials, an amazing brand.
Speaker Change: It has great from a customer standpoint, great traction there and we want to figure out how to best bring it to market in the most effective way. So a lot of those other businesses I think are very much around I don't want to say it in any way a private equity model, but theres a little bit of a of a quartile type of look where we are.
Speaker Change: Anticipate over time that that some of the brands will do extremely well.
And some will be moderate and then there will be some that don't work as well I think our commitment is to learn this this omnichannel way and then again take those learnings and apply them across the core business.
Speaker Change: For instance, the integrated brand building a lot of our ROE as our return on AD spend models that were running right now on the integrated brand building of the core.
Speaker Change: Originated or at least the insights came from some of these other brands and so we see this when we look out three years four years five years from now.
Speaker Change: Having a lot of learnings that come through this ecosystem of brands and you've got the brands. We've got the affiliates, we got the manufacturing all of these learnings.
Speaker Change: Learnings there so that's kind of how we're seeing it I think the last thing I'll say is organic versus inorganic rise obviously has come through a lot of investments.
Speaker Change: That we've made across smaller brands and then we scale them up.
Speaker Change: And I would imagine that we will continue to be mostly the case, but I do think that that rise is beginning to have capabilities. There were future state over the next few years, we could see brands being launched inside that.
Speaker Change: That ecosystem that actually originated organically from from all of the insights that we have.
Speaker Change: Got it thanks for that and then just for my last one.
Speaker Change: I wanted to ask about profitability <unk> been on a journey now to reduce cost or the expanded some of the initiatives to take out additional costs through the remainder of this year and next year, but as I look at the core direct selling gross margin is still down.
Speaker Change: 130 bps on a year over year basis, and <unk> been taking out costs and managing promos more efficiently and doing the SKU rationalization, yes. It just seems like we're not seeing that show up in the P&L I know you mentioned mix, but maybe just unpack.
Speaker Change: For us in some greater detail, how all of that is coming together and why we're not seeing that in the P&L just yet.
Speaker Change: Yeah, I'll, probably so this will be a good one for James and I to tag team on maybe my optimism.
Speaker Change: James is pragmatic pragmatic views will be helpful. The way I look at it very much. So is its really hard with the top line being what it has been.
Speaker Change: To counter some of the effects and then I think geographic mix for us has been difficult when we look at.
Speaker Change: Some higher margin businesses in China for instance is that businesses has reset down it's really impacted our gross margins globally a lot of the cleanup work. We started in 2024 has been really getting around kind of the periphery.
Speaker Change: <unk> sub optimized skus like I said, we've hit a little more than 20% of our skus out this year, but they don't really affect significantly any sort of scaled revenue. What we're really talking about next year and this additional 30%, we really do start to get into more.
Speaker Change: More of the margin erode of.
Speaker Change: Products and Skus that do have revenue and so theres a shift of customer behavior that needs to happen.
Speaker Change: But it's also the more impactful side of the margin model that I think will play out and so part of it is cleaning up the fringes. So that we can go after the more media.
Speaker Change: Components of margin that we're focused on and I am optimistic and this is why I stated in my my opening remarks.
150 to 200 basis points for our core business is really what we're laser in on to do and I think that opportunity exists if were prudent and vigilant on it but James what are your yes, I mean, it's a great question. It's one that we grapple with over.
Speaker Change: Over the last two years, we've worked on.
James Thomas: Trying to get that.
James Thomas: That gross margin improvement Ryan touched on it I mean, the majority of the shift away from China in the last two years has moved from 140% of our business now to the current quarter at 12% and then in addition to that the other market of South Korea with the declines that we've seen in that market. They tend to overshadow some of the.
James Thomas: The wins that we're making through the portfolio optimization and a large part of that upside is in a lot of the developing markets, where we're focused through Latin America also through southeast Asia, where we're starting to see good signs of improvement in our developing market strategy, where we have really reduced the overall SKU count to that higher profile margin mix.
James Thomas: So as we continue to scale and move to that I believe we will start to see those improvements we have held steady.
James Thomas: From.
Q1, Q2, we showed a 40 basis improvement sequentially from Q2 to Q3, so we are getting small wins with different.
James Thomas: Product launches a mix and we're really starting to target with our future product launches that targeting that profile margin that we want to move forward to take us back to that 78% to 80% is.
James Thomas: As we move through 'twenty five 'twenty six.
Speaker Change: Got it very helpful. Appreciate all the detail I'll pass it on.
Speaker Change: Thanks, Jason.
Speaker Change: And your next question comes from the line of Ashley Hogan with Jefferies. Please go ahead.
Ashley Hogan: Hi, Thanks for taking our question.
Ashley Hogan: So we actually asked about this last quarter. If I just wanted to get an update here you talked about some kind of affordable luxury launches and I know it is still early days last quarter, but any update there and then curious nutrition side, just how is expanding your customer base, maybe can talk to that.
Ashley Hogan: Based on the nutrition side versus the legacy business and then any additional color on China and then the expectation that the government can stay.
Ashley Hogan: The market.
Ashley Hogan: So much yeah, no all really meaty topics Ashley so I'll connect on those so regarding affordable luxury.
Ashley Hogan: We are focusing a lot of our attention on affordable luxury but more from a point of view that the products, we're bringing to market we want to make sure. They are priced right. So for example, the mine 360.
Ashley Hogan: <unk> that we're just starting to introduce now most of those products really fit in what I would define as masstige pricing.
Ashley Hogan: Maybe slight prestige, but not premium.
Speaker Change: So that line coming out Thats new.
Speaker Change: We're doing we're doing work there we have some social selling products like peptide pout.
Speaker Change: We've had lash and brow serums and others other types of topical treatments that have really been.
Speaker Change: To be in that affordable luxury or that the end of the press masstige to prestige area and I think that I think is inflation with the hyperinflation was rolling through that that definitely has been a focus of ours to orient that way.
Speaker Change: Hopeful with with inflation around the globe tampering.
Hopefully stabilizing much better we'll start to see that.
Speaker Change: That our prestige.
Speaker Change: Not quite premium, but prestige product categories will will perform better as we move into 2025. So continue to focus on affordable luxury, but also making certain products that that by the new ones. We put in the market, but also making certain that we're investing in the brands.
Speaker Change: Have.
Speaker Change: Kind of broader potential as the economy stabilizes.
Speaker Change: On the nutritional supplement side this is where I get pretty interested in it maybe it applies to chase an outlook question for 2025, new skin has historically been a very evenly weighted relatively evenly weighted business between new skin, our personal care business and our wellness our nutrition business over the course of the last seven.
Speaker Change: And her eight years the vast majority of our innovation has come around the the personal care side, which is which is kind of where social commerce is thriving and so theres a lot of sense and logic in doing that but as we look at the portfolio performance nutrition, and we look across business.
Speaker Change: Categories or product categories nutrition generally holds.
Speaker Change: Most every market segment higher customer with active acquisition and retention.
Speaker Change: For the nutritional supplements and that might partially be due to just the nature of your design supplements on 30 days models, we have a lot of subscription based revenue with nutrition more so than in the personal care side and so we just see longer tail customer lifetime value through the nutrition side.
Speaker Change: We've really kind of.
Speaker Change: On an innovation based basis for 2025, we've shifted more innovation to go into that nutrition business, which I think will bolster that back up to a more even split and I think from a customer acquisition and including our affiliates and our leadership acquisition retention, we should see.
Speaker Change: Improvements there so.
Speaker Change: Strategically we think it's an important move for us to balance the portfolio, a little bit better and that's what we'll be doing.
Speaker Change: Your last question was on I'm trying to remember.
Speaker Change: China I wrote Karla I wrote color, but you said color on China. So yes.
Speaker Change: Yes, So China is interesting obviously as you said theres a lot of money being placed into the economy there by the local government.
Speaker Change: It's primarily going into sectors that probably don't directly drive to consumer spending.
Speaker Change: In the market per se and I'm not sure how that's going to play out longer term, we are where we're focusing really on the consumer in China.
Speaker Change: And hoping to see shifts in spending there as opposed to the savings rates that we're seeing right now so a little too early to tell I was there a couple of weeks ago meeting with our management team and some of our top leaders and it was and it was it was interesting because theres still a lot of energy.
Speaker Change: And frankly, there is there is some optimism at the local market level that the economy is going to look up because the government is investing in the economy.
Speaker Change: So my hope is that consumer sentiment will follow suit and that the savings will start to be spent and spent particularly in premium beauty and the like but I think based on some of some other peers in the area.
Speaker Change: People aren't baking a lot into China in 2025 and for US I think we're being fairly cautious right now.
Speaker Change: With hope that that some of the stimulus will will improve consumer confidence and sentiment overall will drive.
Speaker Change: Purchased back up at least in the prestige area if not premium.
Speaker Change: Thank you so much that helps.
Speaker Change: Yes very helpful. Thank you I'll pass it on.
Speaker Change: Thanks Ashley.
Speaker Change: I think we're actually keeping it fairly short and sweet today. So I just wanted to maybe wrap up by thanking you all for being on the call and for continuing to.
Speaker Change: Monitor and observe our transformational story here at Nu skin, I think I think absolutely.
Speaker Change: The headwinds that have been here over the last couple of years as we look out to the future. We continue to see a lot of opportunity for new skin in the world based on what we provide which is opportunities for people to look feel and live better lives and that is something that's in need today, how we get there and how.
We get that to market is the area, where we're focusing a lot in terms of exploring integrated brand building, new product offerings and new opportunities throughout our broader rise ecosystem to make that happen. So we appreciate you tuning in look forward to updating you quarter by quarter as we go have a good day.
Speaker Change: Thank you and this concludes today's conference call. Thank you all for participating you may now disconnect.
Speaker Change: Okay.
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