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SALES SHOT FROM BASEMENT TO 10 STORIES HIGH

SHARE SALES SHOT FROM BASEMENT TO 10 STORIES HIGH

Sitting atop the 10-story building in the most luxurious offices around, Nu Skin executives Steven J. Lund, Blake M. Roney and Sandie Tillotson have a great view of the city their company has changed forever.

In just 10 short years, the company that sells skin-care and nutritional products through multilevel marketing has grown from a living-room family-and-friend operation to a worldwide multimillion-dollar marketing giant. Company officials won't release annual sales figures, but it's clear that Nu Skin brings hundreds of millions of dollars into the local economy."We've been told that we bring more money into the local economy than the entire Utah ski industry," said Lund, Nu Skin executive vice president.

In 1984 Nu Skin had five employees, 18 products and 200 distributors. The company now has 1,517 employees, 105 products and more than a half million distributors. Nu Skin is the sole source of income for about 60,000 distributors. All Nu Skin sales transactions eventually flow through its Provo office and distribution center.

"We offer a lot of people the opportunity to make huge profits," Lund said.

Ironically, the person whose idea launched the company now has little involvement with its operations. Eleven years ago Nedra Roney turned to her brother, Blake Roney, and asked why no one made skin-care products without fillers.

"That's where we got our motto, `All of the good and none of the bad,' " Lund said.

So Blake Roney, who was working with Lund at the time as a law clerk, went to work researching his sister's question. He called ingredient and personal-care manufacturers and found out that no one made products that contained only ingredients good for the body. He also found an interest in products made with new innovative skin-care ingredients.

"It started out from the perspective of personal-care needs. We thought there must be others that felt like Nedra," Lund said.

Blake Roney found a Texas company willing to manufacture some non-filler products, and in June 1984 he, his sister, Tillotson and Lund were selling the products out of Nedra Roney's basement.

"We were able to convince the folks in Texas that if they could make it, we could sell it," Lund said. "And from the very get-go there was a demand for our products."

For the first few years the company saw modest growth. But the multilevel marketing push, the high-quality product line and Blake Roney's enthusiasm caused the company to explode between 1986 and 1991. Sales were growing monthly by 10 percent to 40 percent. The company was hiring every available body and grabbing every available office space. In 1991 Nu Skin had 11 warehouses throughout Provo and housed executives in offices throughout downtown.

"We were under this constant assault to get more infrastructure in place to handle these sales," Lund said. "We were very inefficient and were not providing a high level of support for our distributors."

That all changed in 1992 when Nu Skin opened its 10-story office complex in downtown Provo and a state-of-the-art distribution center in south Provo. When the company's operations became more efficient the work force was reduced.

During the same time period the company hit a wall. Sales dropped when several states began investigating claims that Nu Skin was a pyramid. Investigators said distributors were buying products and then selling the marketing plan more than the products.

"The controversy was poisoning the atmosphere that our distributors were trying to sell under," Lund said.

After a year of legal battles company officials calmed the waters by agreeing to offer distributors an unlimited time period to return resaleable products. Lund said the company felt vindicated when returns only increased from 1 percent to 2 percent.

"We know some distributors were acting inappropriately, but the return numbers tell us that by and large our distributors were acting very morally," he said.

Nu Skin's sales are again on the upward cycle, helped by new markets in seven foreign countries and a new line of nutritional products. Continuing to offer new products and enhancing the profit opportunities for distributors is the key to the company's future, Lund said.

"We truly look at this company like we're still in the start-up stages. Every day we have to think about what's going to keep us viable, and right now we are laying the seeds for years to come," he said.

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Additional Information

Nu Skin's growth

Year 1984 1986 1988 1990 1992 1994

Products 18 26 40 48 76 105

Employees 5 24 46 1,568 1,341 1,517

Independent distributors 200 5,000 18,000 64,753 349,370 542,735