Consumer Products

Herbalife Posts Strong Q2 Earnings Beat Despite Slumping Sales

Herbalife Logo
Source: Courtesy Herbalife Ltd.
Herbalife Ltd. (NYSE: HLF) reported its second-quarter financial results Wednesday after the markets closed. The company had $1.24 in earnings per share (EPS) on $1.2 billion in revenue, compared to consensus estimates from Thomson Reuters that call for $1.11 in EPS on $1.14 billion in revenue. The same period in the previous year had $1.55 in EPS on $1.31 billion in revenue.

Local currency net sales grew by 1%, while reported net sales declined 11% primarily due to the continuing unfavorable impact of currency exchange rates.

The company gave guidance for the third quarter as net sales growth of -10% to -7% and EPS of $1.00 to $1.10. There are consensus estimates of $1.01 in EPS on $1.17 billion in revenue.

In terms of its segments the company reported (compared to the same period last year):

  • North America revenue decreased 8.2% to $230.0 million.
  • Mexico revenue decreased 13.1% to $129.2 million.
  • South and Central America revenue decreased 34.3% to $133.5 million.
  • EMEA (Europe, Middle East, Africa) revenue decreased 14.7% to $193.8 million.
  • Asia Pacific revenue decreased 21.9% to $239.1 million.
  • China revenue increased 39.2% to $236.7 million.

Michael Johnson, chairman and CEO of Herbalife, commented on earnings:

The second quarter continued the improving trends we saw in the previous quarter in terms of sales volumes and key sales leader metrics, and we believe we will see these positive trends continue through the second half of the year.

Johnson added:

Our Members around the world are more excited and engaged than ever as we invest in innovative new products and enhance our marketing and infrastructure to support their businesses and ensure we are putting customers first in all we do. We continue to see what we believe is the positive impact of the changes we implemented and remain confident that we are creating an even stronger platform for sustainable growth that will deliver long-term value for our shareholders.

At the end of the quarter, the company generated $197.6 million in net operating cash flow, and invested $16.2 million in capital expenditures. On the books, Herbalife had cash and cash equivalents of $749.6 million compared to $645.4 million at the end of December 2014.

Shares of Herbalife closed Wednesday down 2.4% at $49.10 on a 52-week trading range of $27.60 to $56.74. Following the release of the earnings report, shares were initially up 5.9% at $52.00 in the after-hours trading session. The stock has a consensus analyst price target of $64.25.

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