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Why Consumers Still Spend on Beauty

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Nu Skin is the latest skin-care company to see strength during the recession.

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In the job market, age may bring experience, but it also brings higher salary requirements and the possibility the candidate is out of touch with the latest technological trends.

As unemployment climbs past 10%, many people are trying to find any advantage they can that will make them stand out from the crowd when they walk into an interview -- this could mean a particularly astounding resume, or it could mean looking better than the competition.

People are jumping on the chance to look more youthful and it's showing on the bottom lines of cosmetic and skin-care companies. (See also: Six Ways We're Stifling the Unemployed.)

Nu Skin (NUS), a maker of anti-aging skin products, announced Tuesday that it's raising its forecast for the fourth quarter and the full year. The company estimates its fourth-quarter revenue will be in the range of $360 million to $365 million, up from the previously guided range of $343 million to $348 million. It increased its earnings guidance to a range of $0.37 to $0.39 per share, up from the prior forecast of $0.32 to $0.34 per share. Analysts polled by Thomson Reuters expect earnings, on average, of $0.36 per share on revenues of $347.98 million.

"We are raising our guidance primarily due to a very successful prelaunch of our flagship ageLOC skin care system at our global distributor convention, as well as our anticipation that Japan will continue to see a small trend improvement in the fourth quarter," said Nu Skin Chief Executive Truman Hunt.

For the full year, Nu Skin now expects annual earnings per share of $1.30 to $1.32, up from $1.25 to $1.27 per share, on revenues of $1.3 billion, slightly higher than previous forecasts.

Nu Skin sells the ageLOC daily skin-care system and Future Serum, as well as the Galvanic Spa System II, Tru Face Essence Ultra, LifePak Nano and the g3 nutrition beverage. The company is holding its annual shareholders meeting in New York today.

Nu Skin isn't the only company benefiting from the insecurities of the unemployed. Estee Lauder (EL), Avon (AVP), and Bare Escentuals (BARE) have all seen their products jump off the shelves, despite the recession.

Bare Escentuals' stock hit new 52-week highs in recent weeks after the company reported third-quarter results that beat analysts' estimates with revenues growing 4% during the quarter to $135.7 million.

Meanwhile, Estee Lauder reported a first quarter that wowed investors. The company attributed bottom-line growth to the launch of its new Advanced Night Repair anti-aging skin-care line in July. Profit rose to $140.7 million, or $0.71 per share, in the July-to-September quarter. That's up from $51.1 million, or $0.26 per share, in the year-prior period. "The product has a high gross margin and helped drive the brand gains in global skin-care sales and operating income," CEO Fabrizio Freda said in a statement.

On a local currency basis, Avon's beauty sales grew 8% in its latest quarter. The company said it saw gains in all categories: fragrance, color cosmetics, skin care, and personal care.
No positions in stocks mentioned.

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