Nu Skin Enterprises, Inc. (NYSE:NUS) offered an update today on the situation in China via a press release. Officials there have been investigating the company’s activities in the wake of a report from the People’s Daily. The company reported what basically amounts to a slap on the wrist, is why investors seem relieved today.
Nu Skin China fined
Chinese officials levied a fine of $524,000 against Nu Skin Enterprises, Inc. (NYSE:NUS)’s China operations for selling some products through some h individual direct sellers. Although those products were allowed to be sold in China’s retail stores, they weren’t registered as products which could be sold through direct sales.
Chinese regulators also fined Nu Skin Enterprises, Inc. (NYSE:NUS)’s China business an additional $16,000 for not having enough documentary support for the claims it made about its products. In addition, officials fined six of Nu Skin’s employees for unauthorized promotional activities. That amounted to $241,000.
Nu Skin China asked to ramp up distributor education
They also asked Nu Skin Enterprises, Inc. (NYSE:NUS)’s China operations to improve the education and supervision of its sales representatives. The company has already begun to make changes which Chinese officials noted in their investigations. It states that it isn’t aware of any “material enforcement investigations currently pending in China.”
Nu Skin Enterprises, Inc. (NYSE:NUS) revealed in January that it had voluntarily suspended some operations in China. The company stopped accepting applications for new sales representatives and suspended promotional meetings. It stated this morning that it will continue seeking direction from Chinese officials so that it can resume “normal business activities” there again.
Nu Skin competitor shares react
Last week, shares of Nu Skin Enterprises, Inc. (NYSE:NUS) declined meaningfully after the company’s last update on the situation in China. Nu Skin said in its regulatory filing last week with the U.S. Securities and Exchange Commission that it could see negative impacts on sales because of the investigation in China. However, Wall Street seems to now see a limit to those negative impacts, as shares have soared even higher than they were last week.
Shares of competitor Herbalife Ltd (NYSE:HLF) have also risen nicely today, climbing more than 8%. The company’s business model bears a similar resemblance to that of Nu Skin Enterprises, Inc. (NUS), so the fate of the two companies’ stocks has been tied together. Another competitor, USANA Health Sciences, Inc. (NYSE:USNA), saw its stock rose nearly 11%.