Herbalife (HLF) Exceeds FTC Threshold, Updates Guidance
Zacks Investment Research | Jun 04, 2017 09:08PM ET
Herbalife Ltd. (NYSE:HLF) informed that 90% of the U.S. sales were documented purchases by consumers in May, which consisted of over three million receipted retail transactions because of its distributors’ commitment. Further, management said it outpaced the key threshold of 80% under its agreement with the U.S. Federal Trade Commission.
Notably, Herbalife recognizes its distributors’ significant efforts and informed that roughly 400,000 customers have converted or signed up as preferred members in the U.S. since Oct 2016.
As a result, the company raised its earnings guidance for the second quarter and full-year 2017. Herbalife now expects its adjusted earnings in the band of 95 cents–$1.15 for the second quarter that ends on Jun 30. Earlier, it had projected the same in the range of 85 cents–$1.05 and delivered $1.29 in the year-ago quarter. The Zacks Consensus Estimate is currently pegged within the company’s guided range at $1.00. In addition, management anticipates earnings per share in the range of 75–95 cents for the quarter versus 65–85 cents guided earlier.
For 2017, Herbalife estimates its adjusted earnings in the band of $4.10–$4.50 per share versus $4.05–$4.45 guided previously. However, the company delivered posted adjusted earnings of $4.85 in 2016. The Zacks Consensus Estimate is currently pegged at the higher end of the current guided range. Moreover, management anticipates earnings per share for the full year in the range of $3.30–$3.70 compared with the previously guided range of $3.25–$3.65.
However, the company expects sales decline to widen in the range of 2–6% from 0.5–4.5%. Also, volumes are expected to decrease 4–8% compared with previous range of 1–5% for the second quarter.
The company expects net sales in 2017 to increase nearly 0.5–3.5% versus 3–6% anticipated earlier. Volumes are projected to be down 1% to up 2% compared with previous guided range of 2–5% growth.
Herbalife issued soft sales guidance for both the second quarter and 2017, due to the new FTC rules in the U.S., softness in its Mexico operations and distributors adopting the latest protocols. Nevertheless, the company believes that its sales will be impacted only for a short time span, which will be followed by a sequential improvement.
Recently, the company posted better-than-expected first-quarter 2017 results. In fact, Herbalife’s earnings have outpaced the Zacks Consensus Estimate for 10 straight quarters now, with a trailing four-quarter average of 18.4%. Also, its shares have outperformed both the Zacks categorized Zacks Investment Research
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