Herbalife Slashes Full-Year Forecast, Shares Slide

Earnings Reuters

Herbalife Ltd (HLF), a maker of weight-loss and nutritional products, slashed its full-year revenue and adjusted profit forecast as it wrote down the value of its Venezuelan assets.

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Shares of the company, which also reported a 92 percent drop in third-quarter profit, fell 13 percent after the bell on Monday.

The weak forecast underscores faltering sales at the company, which has been strenuously denying claims by activist investor Bill Ackman that it is a pyramid scheme.

Ackman, who has taken a $1 billion short position against Herbalife, has said the company makes most of its money by recruiting new distributors rather than selling products to customers.

The same allegations were brought by a former distributor in a class-action lawsuit, which the company settled last week for $15 million after a costly 18-month legal battle.

The negative publicity surrounding the company has crimped sales in North America, its biggest market. Sales in the region fell 2.2 percent to $223.4 million in the quarter.

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The company said it took a charge of 97 cents per share in the quarter ended Sept. 30 related to the "remeasurement" of its assets in Venezuela.

Sales at the company's South and Central America region, which includes Venezuela, fell 15 percent to $205.2 million in the third quarter, accounting for 16 percent of total sales.

The devaluation of the bolivar has hurt many companies, including Colgate-Palmolive Co, Ford Motor Co and Procter & Gamble Co, as it reduces the value of sales in the Latin American country.

Herbalife said it expects full-year sales to grow 3.5-4.3 percent, down from its previous forecast of 8.5-10.5 percent.

It expects full-year adjusted profit of $5.80-$5.90 per share, compared with the $6.17-$6.32 it had forecast earlier.

Net income for the third quarter fell to $11.2 million, or 13 cents per share. Excluding items the company earned $1.45 per share, below the average analyst estimate of $1.51 per share, according to Thomson Reuters I/B/E/S.

Revenue rose 3.5 percent to $1.25 billion.

The company's shares were trading at $49.65 after the bell. Many investors are betting against the stock, with short interest on nearly a third of the company's outstanding shares.

(Reporting by Ramkumar Iyer in Bangalore; Editing by Saumyadeb Chakrabarty)