Inflation-pandemic double whammy blindsides Herbalife

By Hank Schultz contact

- Last updated on GMT

©Getty Images - onurdongel
©Getty Images - onurdongel

Related tags: Multi-level marketing

Herbalife’s stock price took a tumble after the company announced disappointing earnings yesterday. Continuing pandemic issues and global inflation hurt the company’s bottom line.

The giant multilevel marketer of dietary supplements and functional foods reported that sales fell in China, Europe and the Americas, while India provided a lone bright spot.

Inflation, pandemic taking bites

Herbalife CEO Dr John Agwunobi, MD, said combined pressures of the pandemic and global cost increases meant the company’s performance was even worse than the declines that had already been predicted.

“Overall, top line results fell short of our expectations. From a macro perspective, we believe economic pressures from the inflationary environment and widespread geopolitical uncertainty has had an impact on our channel. Additionally, the current wave of the COVID-19 crisis in Asia-Pacific and South and Central America negatively impacted the business during the quarter. And in China, the latest lockdowns have added to ongoing challenges in that market,” ​Agwunobi told stock analysts during an earnings call yesterday. The call was posted as a transcript on the site seekingalpha.com​.

Company projects weak year to come

Herbalife recorded first quarter net sales of $1.3 billion, down 11% from a year previously. The company revised is projections in light of the weak beginning of the fiscal year.  The company now expects second quarter sales to decline by between -17% to -11%.  Full year guidance is not quite as bleak, being projected at -4% to -11%.

Stock traders reacting sharply to the news.  Herbalife’s stock dropped by more than 9% to finish the day at slightly more than $25 a share.  The company’s share price is off by more than 50% from a 52-week high of more than $55.  The stock price also took steep tumbles after the company’s earnings announcements in September of 2021 and in February of this year. The company’s all time share price high of more than $60 came in February of 2019.

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