Top Companies Report

42. Herbalife

June 29, 2012

Los Angeles, CA
310.410.9600
www.herbalife.com
Sales: $147 million for personal care products.
Corporate sales: $3.4 billion.

Key Personnel: Michael O. Johnson, chairman and chief executive officer and director; Brett R. Chapman, general counsel; Desmond Walsh, president; Richard P. Goudis, chief operating officer; John DeSimone, chief financial officer; Paolo Giacomoni, vice president, worldwide outer nutrition.

Major Products: Personal care products marketed under brand names such as Skin Activator, Herbal Aloe, Radiant C and NouriFusion.

Comments: Herbalife’s “outer nutrition” business—which encompasses its personal care products—continues to shrink in relation to its other operations, like weight management. But on a positive note, 2011 revenues of $147.8 million were ahead of 2010 results ($127.5 million). Of its corporate sales, the Asia-Pacific region represented 27.2%, North America, 20.2%; South and Central America, 16.0%; EMEA, 17.8%; Mexico, 12.7%; and China 6.1%.

As of Dec. 31, 2011 the company had approximately 2.7 million independent distributors in 79 countries.

A publicly traded company, the company’s stock recently took a hit when David Einhorn of Greenlight Capital pitched questions during the company’s earnings call on May 1. Although Herbalife’s financial performance was positive, Einhorn’s query sent the firm’s stock tumbling. In fact, it dropped more than 20% on that day, prompting the company to issue the following statement:

“Today, on Herbalife’s earnings call the company announced record results—its best quarter financial results in 32 years. The fact that recognized short seller David Einhorn asked questions on the call put pressure on Herbalife’s stock price.

To be clear: Mr. Einhorn’s questions raised no new subjects or concerns. They were elementary questions usually asked by investors new to our industry. These are issues that have been thoroughly addressed before. Analysts and investors can review the specific answers to his questions on our website later today at www.herbalife.com.

Our business fundamentals are very strong and we are confident in our financials, our disclosures, and our network marketing business method.

We believe the drop in Herbalife’s stock price today is a buying opportunity given the strong business fundamentals and our outlook for ongoing success. We currently have $428 million in repurchase authorization.”

Herbalife’s stock, as of June 12, 2012, was trading at $45.42; it had been at $72.69 on April 23, 2012.
Herbalife is again the title sponsor and official nutrition company of the 2012 World Football Challenge, a soccer exhibition tournament that takes place this summer in the US and Canada.


 

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