Herbalife misses profit estimates, share price plunges
Herbalife reported a second-quarter profit of $119.5 million, or $1.31 a share, compared with a profit of $143.2 million, or $1.34 a share, for the year-earlier period. The company notched $1.3 billion in revenue, compared to $1.22 billion in the year-ago quarter. Adjusted profit was $1.55 a share. Analysts were expecting a profit of $1.56 a share on revenue of $1.36 billion. It was the first time the company has missed Wall Street estimates in 21 consecutive quarters.
Among Herbalife’s issues are costs related to responding to the pressure brought to bear by activist investor Bill Ackman, who through his Pershing Square investment firm has taken a $1 billion short position on the company. And the company is bearing costs related to investigations as well, CEO Michael Johnson said.
“Our confidence in the success of our products and sales methods is a catalyst for member engagement and activity and our strong financial performance. As you know, our company is a subject of an FTC inquiry. We are confident that there will be a successful conclusion that will keep Herbalife on the path to success for years to come,” Johnson said in an earnings call with analysts.
Herbalife is the world’s largest network marketing company devoted solely to nutritional products. The comapny recorded $4.8 billion in net sales in 2013.
