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Herbalife taps into new breed of ‘Generation H’ distributors in US

By Elaine Watson , 23-Feb-2012

Strong growth for Herbalife in the US is being driven by a new breed of young distributors dubbed ‘Generation H’, according to the direct sales supplement giant.

Unveiling a 22.1% rise in group net income and a 20% rise in net sales in the three months to December 31, 2011, Herbalife said local currency net sales surged by 34% in the Asia Pacific region and by 33% in South and Central America.

However, it still notched up double-digit net sales growth in North America over the same period and increased distributor numbers by 5%, revealed president Des Walsh during Herbalife’s Q4, 2011 earnings call yesterday.

“The North American region also had another strong quarter posting almost 18% net sales growth."

New Herbalife 24 sports nutrition range helping to attract new distributors and end consumers

And this was being driven by a new breed of distributors under the age of 35, dubbed ‘Generation H’, he claimed.

“In the US we are seeing continued momentum and business growth in the generation H distributor group... We are seeing exciting adaptations of Nutrition Clubs… and higher utilization of Herbalife 24 products [the new sports nutrition range] in addition to stronger use of social networks.”

Meanwhile, a “younger more athletic distributor group in western Europe” was also embracing Herbalife 24, which was helping Herbalife appeal to a new customer base beyond its core weight management audience, he said.

A new generation of Herbalife distributors

Chief executive Michael Johnson added: “Herbalife24 is for people with active lifestyles... so we think the general public is receptive to one or all of the products.

“It’s attracting a younger distributor to us who isn’t necessarily a weight loss distributor.

“It’s a fabulous thing to see a younger more fit group coming in, not just concerned with weight loss, but concerned with total nutrition and fitness nutrition... We are seeing a new generation of Herbalife distributors.”

Q4 and FY 2011 results breakdown

In the three months to December 31, 2011, net income rose 22.1% to $105.4m, while group net sales increased 20% and volume growth topped 23%.

For the full year 2011, Herbalife reported net sales of $3.5bn, up 26% on 2010. Adjusted net income surged 35% to $413.3m.

Meanwhile, plans to increase the percentage of products manufactured in-house were progressing well, added Johnson.

“We now manufacture more than 25% of our global volume in our own manufacturing facilities.”

He added: “The interdependency of three metrics – volume growth, engagement and [distributor] retention – gives us confidence that the best is yet to come."

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