By Atossa Araxia Abrahamian
July 29Nutritional products giant Herbalife
said its better than-expected earnings and rosy 2013
outlook were driven by a fast-growing global distributor network
and strong demand for its weight-loss shakes and supplements.
All the recent publicity over the company's business model
did not hurt, either, Herbalife President Des Walsh told
"Despite all the noise on Wall Street, we saw a record
number of 80,000 new distributors in the U.S. in the second
quarter," said Walsh.
"Now, more people who are aware of what's happening have
taken time to understand our business, and with that comes an
acknowledgment of the legitimacy of our products," Walsh said.
Herbalife, whose weight-loss and nutrition products are sold
through a network of independent individuals all over the world,
has spent much of 2013 caught in the crosshairs of two Wall
In December, Bill Ackman, who heads Pershing Square Capital,
made a public bet against $1 billion dollars worth of Herbalife
stock and accused the company of being a "pyramid scheme."
Activist investor Carl Icahn, on the other hand, stood by
Herbalife and put two of his representatives on its board of
Ackman's early remarks caused the company's shares to
plummet to about $25 from $45 late in the year. But the stock
recovered to hit 12-month highs of $62.23 last Tuesday and
neared $64 in extended trading after the company announced its
second-quarter results Monday.
If this surge continues, Ackman's short position could
become highly unfavorable. Ackman's spokeswoman did not
immediately comment on the results.
Herbalife's second-quarter earnings point to a positive
second half of 2013. The Los Angeles-based company raised its
2013 forecast for adjusted earnings per share to a range of
$4.83 to $4.95 from $4.60 to $4.80 previously.
Net sales rose 18 percent to $1.2 billion, driven by strong
demand for its products and a greater awareness from consumers
"that they need to get their weight in check," said Des Walsh.
"The obesity epidemic has always been with us, it just
happens to be getting worse. What's happening is that consumers
are gaining a greater understanding of the impact of obesity on
lives, longevity, and the economic costs of obesity."
Herbalife beat analysts expectations for adjusted earnings
per share, posting results of $1.41 compared to the anticipated
$1.18, according to Thomson Reuters I/B/E/S.
The company's net income for the second quarter was $143.2
million, or $1.34 per share, compared with $132.0 million, or
$1.09 per share, a year earlier.