Inflation to hit Herbalife’s growth as it comes out of pandemic sales hangover

By Hank Schultz contact

- Last updated on GMT

©Getty Images - PM Images
©Getty Images - PM Images

Related tags: Dietary supplement companies, Dietary supplement industry, Dietary supplement, Dietary supplements, Dietary supplements industry, Sales growth

Multi level marketing giant Herbalife has seen sales slow coming out of the pandemic and said that inflation will restrain growth in the coming year.

As one of the largest supplement sellers worldwide, Herbalife is a bellwether for the entire sector.  The company has seen sales slow since the fevered days of pandemic buying in mid 2020 through mid 2021, and is now returning to an underlying pace of growth in the mid single figure range. This mirrors what other reports of dietary supplement sales have shown.

Inflation expected to bite hard

Herbalife CEO John Agwunobi told stock analysts this week during a year end earnings call that inflationary pressures will work to constrain growth for the coming year.  Agwunobi noted that some of the company’s earnings comparisons have suffered because of the extraordinary sales numbers that came out of the pandemic.  Nevertheless, cost increases will take a real toll, he said.

“We are currently observing higher than usual cost increases in our supply chain with respect to raw materials, shipping costs and labor at our manufacturing facilities. This pressure, as well as cost increases expected due to a return to normalized levels of in-person distributor events and activities, are resulting in expected declines for adjusted earnings per share and adjusted EBITDA versus 2021,” ​Agwunobi said.  A transcript of the earnings call was posted on the site seekingalpha.com​.

In terms of region by region results, India was a particular bright spot for the company.  Herbalife recorded a sales increase of 33% in the country.  The sales increases come as a new 150,000 square foot R&D facility in Bangalore comes online.  Agwunobi said the company plans to have 1,500 employees in the country by 2027.

Earnings details

The company recorded $1.3 billion in net sales, which represented a 7% decline year over year.  For the whole year, though, Herbalife set another revenue record with net sales of $5.8 billion, an increase of 5% compared to the prior year.

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