Herbalife Sinks the Most Since August

Updated on
  • Company delivers forecast that falls short of estimates
  • Nutrition seller adopting changes spurred by FTC settlement

Herbalife Ltd.’s operational shake-up, spurred by a settlement with federal regulators last year, is still squeezing results.

The seller of supplements and weight-loss shakes delivered an earnings outlook that fell short of analysts’ estimates, underscoring what Chief Executive Officer Rich Goudis called a “year of transition.” The gloomy forecast sent the shares down as much as 5.7 percent on Friday.

Herbalife is trying to get back on track after last year’s settlement with the Federal Trade Commission forced the company to revamp its U.S. operations and pay $200 million to refund distributors. The company has had to adopt new tools and protocols, which its army of outside salespeople have to learn.

That’s taken a toll on sales, which declined 3.3 percent last quarter. In the fourth quarter, Herbalife expect earnings of 84 cents to $1.04 a share, excluding some items. Analysts had projected $1.11 on average.

The company also narrowed its forecast for the full year, saying earnings would be $4.42 to $4.62. It had previously given a range of $4.30 to $4.70.

Next year, meanwhile, profit will be $4.60 to $5, Herbalife said. Analysts projected $5.56. It expects sales growth of 5.5 percent to 9.5 percent in 2018.

Herbalife shares fell as low as $66.45 in New York trading, in their biggest intraday slide since Aug. 14. The stock had been up 46 percent this year through Thursday’s close.

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