Herbalife’s overall sales in its third quarter of 2020 hit $1.5 billion, buoyed by an especially strong showing in North America. Sales were up more than 50% in the region.
Company swells distributor rolls
This is in contrast to recent years, where multi level marketing companies (MLMs) like Herbalife have seen sales decline and interest in becoming distributors wane in the region.
Company officials said the pandemic crisis may have had a big impact on how potential new distributors now view the business opportunity. The company added 57% more new distributors and preferred members and many of these new participants are younger, which the company said bodes well for the future.
‘Preferred members’ is a category the company added after its high profile settlement of a lawsuit filed by the US Federal Trade Commission to put to rest claims the company was operating an illegal pyramid scheme. A preferred member is a customer who has signed on to the company’s membership rolls solely to get product discounts.
“Approximately, 65% of these new distributors and preferred members are millennials or Gen Z, part of an increasingly health conscious and younger demographic,” said John Agwunobi, Herbalife chairman and CEO.
“There is also the fact that there are many potential distributors sitting at home looking for new ways to fill their day to generate income for their families to perhaps start new businesses,” he added. Agwunobi made his remarks as part of an earnings call with stock analysts. A transcript of the call was posted on the site seekingalpha.com.
Sports nutrition line leads way
Agwunobi said the company’s H24 sports nutrition line has performed especially well with younger consumers.
"Clearly our H24 sports line, attracts the younger demographic and active, healthy active lifestyle demographic that seems to resonate with all demographics, but particularly with that younger demographics. So we know it’s a huge opportunity,” he said.
Herbalife said its real performance was even better than the top line numbers indicate. The company does business in Venezuela, which continues to be in the throes of an economic meltdown. And foreign currency headwinds put a damper on results, too. Sans those impediments, sales would have been up more than 25%, the company said.
Agwunobi said new investments into digital technology platforms, such as individual WeChat store fronts, was helping to shore up sales in China even as in person meetings are still mostly not allowed. And president John DeSimone said the company is investing in new manufacturing capability to fuel future growth.