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spk00: Yeah, no, I think RISE is doing really well, as you said, and we continue to invest in that platform. I mean, it is very much an investment, you know, in that platform as we look to allocate resources there. You know, Maverly, if you break it down, you know, manufacturing is kind of that steady business that for us is 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 customers across multiple channels from DTC, CPG, traditional retail, e-commerce. It's really interesting for us to be able to observe trends and be able to see how innovation is going into market and what channels are winning, frankly. So for us, it's more than just an operational vertical play. It really is helpful and insightful in the beauty and wellness space. But yeah, it continues to go well. We need to continue to invest to fuel that growth. Maverly 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. And there's a lot of interest in that sector with recent deals there. So we'll continue to invest on Maverly. We want to make sure it has the best opportunity for continued growth there. We do have brands, as you mentioned, the likes of BeautyBio. We have investments in a few other brands as well. And we'll see how those go. I think the world of omnichannel is transitioning now. We watch companies like Ulta and others, Sephora, etc. There's a lot of shifting in how their business mix goes from bricks and mortar to online. And I think we're experiencing and learning the same thing as we play with these businesses and understand them better. I think BeautyBio is an amazing brand that 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 in any way a private equity model, but there's a little bit of a of a quartile type of look where we anticipate over time 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 omni-channel way and then again take those learnings and apply them across the core business. For instance, the integrated brand building A lot of our ROAS, our return on ad spend models that we're running right now on the integrated brand building of the core, 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, having a lot of learnings that come through this ecosystem of brands. And we've got the brands, we've got the affiliates, we've got the manufacturing teams, All of these have 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 that we've made across smaller brands, and then we scale them up. And I would imagine that will continue to be mostly the case. But I do think that Rise is beginning to have capabilities there where future state over the next few years, we could see brands being launched inside that ecosystem that actually originated organically from all of the insights that we have.
spk03: Got it. Thanks for that. And then just for my last one, I wanted to ask about profitability. You've obviously been on a journey now to reduce costs and have 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, it's still down 30 bits on a year-over-year basis. And you've been taking out costs and managing promos more efficiently and doing the skew rationalization, yet it just seems like we're not seeing that show up in the P&L. I know you mentioned mixed, but maybe just unpack that. for us in some greater detail how all of that's coming together and why we're not seeing that in the P&L just yet.
spk00: Yeah, I'll probably, so this will be a good one for James and I to tag team on. Maybe my optimism and James's pragmatic views will be helpful. The way I look at it very much so is it's really hard with the top line being what it has been to to counter some of the effects. And then I think geographic mix for us has been difficult when we look at some higher margin businesses in China, for instance, as that business 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 of 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 in this additional 30%, we really do start to get into more of the margin erodive products and SKUs that do have revenue. And so there's a shift of customer behavior that needs to happen. 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 meaty products components of margin that we're focused on. And I'm optimistic, and this is why, you know, I stated in my opening remarks, you know, that 150 to 200 basis points for our core business is really what we're lasering in on to do. And I think that opportunity exists if we're prudent and vigilant on it.
spk01: But James, what are your... Yeah, I mean, it's a great question. It's one that we grapple with, you know, over the last two years as we've worked on trying to get 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, at one point, 40% 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 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've really reduced the overall skew count to that higher profile margin mix. So as we continue to scale and move to that, I believe we'll start to see those improvements. We have held steady from Q1, Q2, Q3, We showed a 40 basis improvement sequentially from Q2 to Q3. So we are getting small wins with different product launches and 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% as we move through 25 and 26.
spk04: Got it. Very helpful. Appreciate all the detail. I'll pass it on. Thanks, Jason. And your next question comes from the line of Ashley Helgens with Jefferies. Please go ahead.
spk02: Hi, thanks for taking our questions. So we actually, we asked about this last quarter, but just wanted to get an update here. You know, you've talked about some kind of affordable luxury launches, and I know those were still early days last quarter, but any update there? And then curious on the nutrition side, just how it's expanding your customer base. Maybe you can talk about customer base on the nutrition side versus the legacy business. And then last, any additional color on China and any expectations now that the government's putting stimulus into the market? Thanks so much.
spk00: Yeah, no, all really meaty topics, Ashley. So I'll connect on those. So regarding affordable luxury, 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're priced right. So, for example, the Mind360 line that we're just starting to introduce now, most of those products really fit in what I would define as mastige pricing, maybe slight prestige, but not premium. And so that line coming out that's new, we're doing work there. We have some social selling products like Peptide Pout, We've had lash and brow serums and other types of topical treatments that have really been built to be in that affordable luxury or that, you know, the prestige to prestige area. And I think as the hyperinflation was rolling through, that definitely has been a focus of ours to orient that way. I'm hopeful with inflation around the globe tempering, and hopefully stabilizing much better, we'll start to see that our prestige, not quite premium, but prestige product categories will perform better as we move into 2025. So continue to focus on affordable luxury, but also making certain that products, by the new ones we put in the market, but also making certain that we're investing in the brands that have kind of broader potential as the economy stabilizes. On the nutritional supplement side, this is where I get pretty interested, and maybe it applies to Jason's outlook question for 2025. You know, Nu Skin has historically been a very evenly weighted, relatively evenly weighted business between Nu Skin, our personal care business, and our wellness or nutrition business. Over the course of the last seven or eight years, the vast majority of our innovation has come around the personal care side, which is kind of where social commerce is thriving. And so there's a lot of sense and logic in doing that. But as we look at the portfolio performance, nutrition, and we look across business categories or product categories, nutrition generally holds in almost every market segment a higher customer acquisition and retention for the nutritional supplements. And that might partially be due to just the nature of you design supplements on 30-day 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. So we've really kind of, as an you know, 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, including our affiliates and our leadership acquisition retention, we should see improvements there. So 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 Your last question was on, I'm trying to remember, I wrote, oh, on China. I wrote color, but you said color on China, so I stopped. Yeah, so China's interesting. Obviously, as you said, there's a lot of money being placed into the economy there by the local government. It's primarily going into sectors that probably don't directly drive to consumer spending in the market per se, and I'm not sure how that's going to play out longer term. We're focusing really on the consumer in China, 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 interesting because there's still a lot of energy. And frankly, there's some optimism at the local market level that the economy is going to look up because the government is investing in the economy. And 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 other peers in the area, people aren't baking a lot into China in 2025. And for us, I think we're We're being fairly cautious right now with hope that some of this stimulus will improve consumer confidence and sentiment overall will drive purchasing back up, at least in the prestige area, if not premium.
spk04: Thank you so much.
spk00: Does that help?
spk04: Yes, very helpful.
spk02: Thank you. I'll pass it off to someone else.
spk00: Thanks, Ashley. 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 monitor and observe our transformational story here at Nu Skin. I think absolutely 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.
spk04: Thank you. And this concludes today's conference call. Thank you all for participating. You may now disconnect.
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