News Column

Shares dive after Herbalife misses earnings

July 28, 2014

By Gary Strauss, @gstrauss, USA TODAY



Hedge fund manager Bill Ackman's short bet against Herbalife may not have delivered the death blow he'd hoped for. But shares of the nutritional products marketer were pummeled 11% after hours Monday following a quarterly earnings report that had some investors throwing in the towel.

Herbalife reported adjusted second-quarter earnings of $1.55 a share, up 10% vs. year-ago results. But it missed consensus estimates of $1.56 a share -- by 1 cent -- ending 21 straight quarters of exceeding income expectations dating back to 2008. Revenue rose 7% to $1.3 billion, vs. estimates of $1.35 billion.

Herbalife, which uses a multilevel marketing business model, has been a punching bag for Ackman, the outspoken billionaire who bet $1 billion against the company in December 2012. Ackman has since been a relentless critic, accusing Herbalife of running a pyramid scheme.

On July 21, ahead of a highly publicized Internet presentation during which Ackman promised to deliver a Herbalife "death blow," shares fell 11%. A day later, Ackman's protracted Herbalife attack lacked punch, and Herbalife shares surged 25%.

Shares closed up 2% to $67.48 Monday, but were down 11.6% to $59.64 in after-hours trading following Herbalife's quarterly report.

Herbalife said excluding the impact of legal and advisory expenses it's spending to fight Ackman and Federal Trade Commission inquiry, it expects full-year earnings in the $6.17 to $6.32 per-share range, up from $6.10 to $6.30, lighter than some on Wall Street anticipated.

Management remains upbeat.

"Herbalife has once again delivered strong results in sales and profitability while demonstrating our continued ability to enhance our earnings per share," said CEO Michael Johnson. "Our performance is a testament to the enthusiasm our millions of consumers and members have for our products."


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Source: USA Today


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