Herbalife posts strong 2nd-quarter results; stock jumps after hours
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Shares of Herbalife Ltd. climbed in after-hours trading Monday after the company reported better-than-expected second-quarter sales of $1.2 billion, up 18% from the same period last year.
The Los Angeles nutritional products company also increased its profit forecast for the full year, saying it expects to earn $4.95 a share in 2013, up from its previous estimate of $4.83.
The company reported adjusted earnings of $1.41 a share for the latest quarter, up 29% increase from last year.
Herbalife Chief Executive Michael O. Johnson attributed the positive results to the “engagement of our distributors and consumer demand for our weight-loss and nutrition products worldwide.”
The company’s stock was up 5.6% in after-hours trading, crossing $64 a share for the first time in more than a year. That jump was on top of a 3.6% in the stock market’s regular session Monday.
The maker of protein powders, vitamins, supplements, juices, teas and snacks remains one of the most scrutinized companies on Wall Street.
In December, hedge fund manager Bill Ackman accused the company of operating an illegal pyramid scheme and announced that he had bet $1 billion that Herbalife shares would fall.
Ackman highlighted his case with a multimedia presentation on Wall Street, arguing that most of Herbalife’s independent distributors lose money while a fortunate few — those at the top of the pyramid — are rewarded for recruiting others into the business.
Herbalife shares nose-dived after Ackman’s announcement, hitting an intraday low of $24.24 a share on Christmas Eve. But they have rallied this year.
The company has denied Ackman’s allegations, arguing that its business model is legal and similar to those of many other multilevel marketing companies, such as Amway and Avon.
Herbalife said it pays bonuses to its independent salespeople, called distributors, for sales they make and for sales made by others they recruit into the business. No bonuses are paid for simply recruiting, the company said.
Earlier this year, the company disclosed that it received inquiries from the Securities and Exchange Commission about its “business and financial operations.” Several consumer groups have asked the Federal Trade Commission to investigate the company. The FTC has declined to comment.
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