Herbalife records 12% net sales growth, on pace to break $5 billion revenue barrier for full year
CEO Rich Goudis said a renewed emphasis on sports nutrition and personalized nutrition is driving company results. The company recorded $1.3 billion in revenue in Q2 2018, which represented 12% growth over the similar period a year previously. If the company maintains this earnings growth pace, it will break the $5 billion net sales barrier for its fiscal 2018.
Goudis highlighted the network marketing company’s successful sports partnerships in a call with stock analysts yesterday. The call was posted in transcript form on the site seekingalpha.com.
Sports wins
“For those of you who are soccer fans, you know our Herbalife Nutrition-sponsored Belgian national team, the Red Devils, made it all the way to the semifinals in the World Cup and placed third overall,” Goudis said.
“Also in the soccer world, we renewed our sponsorship with Cristiano Ronaldo, who recently moved from Real Madrid to Juventus. . . .Cristiano’s move was highly publicized and we leveraged the news through print ads and social media,” he said.
New products for Asian markets
On the personalization front, Goudis said the company has made strides both to meet local product preferences as well as address the needs of consumers in various life stages. In India, for example, a new R&D center the company opened in Bangalore has borne fruit.
“Several local flavors of popular products were launched in Q2 to provide more consumer choice by offering options that resonate with consumers in each market. For example, in India, we introduced the first ever local flavor in that country. Our Formula 1 Healthy Meal in kulfi flavor is based on a popular Indian frozen dairy desert. It was one of the highlights at their annual sales event in June and is already the top seller in that market,” he said.
“We also introduced a local flavor of Herbal Tea Concentrate in Hong Kong. This new flavor, honey ginger, was developed and launched in the country in June, and it has quickly become the number one seller,” Goudis continued.
Goudis also highlighted a new sports nutrition bar that carries a NSF Certified for Sport certification. And he said a new shake formulation has been launched to address the specific nutritional needs of new mothers.
Rapid growth in China
In China, Goudis highlight recent high profile meetings he had during the quarter with government officials. In May he met with Chinese Vice President Wang Qishan. And in June he met with the governor of Jiangsu province.
Growth in sales in China was particularly strong, with a measure of activity Herbalife uses called ‘volume points’ increasing 27% year over year. Goudis said the company was not placing too much emphasis on that year to year comparison, because in the first quarter of 2017 the company had announced a price increase that induced a number of distributors to purchase large quantities of product ahead of that change.
“So when we had the price increase in April of last year, it pulled a lot of volume into March, which really impacted both first and second quarter last year and the comparisons this year, right? So the growth rates are – obviously you've got to neutralize that a little bit. But the volume is still strong,” he said.
Herbalife reset its outlook for the rest of 2018. The company now expects net sales to increase between 8.3% and 12.3% for the full year.
