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Herbalife Ltd. Announces First Quarter 2009 Results! |
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Tuesday, 05 May 2009 |
 Yesterday Herbalife Ltd. reported first quarter 2009 net sales of $521.7 million, a decrease of 13.7 percent compared to the same period of 2008, primarily reflecting the unfavorable impact of currency fluctuations. Excluding the impact from currency fluctuations, local currency year-over-year net sales declined 0.9 percent. For the quarter ended March 31, 2009, the company reported net income of $41.5 million, or $0.67 per diluted share, compared to $62.4 million, or $0.93 per diluted share in the first quarter of 2008, reflecting lower net sales attributable to unfavorable currency fluctuations, coupled with a higher effective tax rate reflecting country mix, partially offset by accretion from the company’s share repurchase program. Excluding the impact from adjusting items in the first quarter, adjusted net income was $41.9 million, or $0.68 in adjusted diluted earnings per share, reflecting a decrease of 32.7 percent and 26.9 percent, respectively, compared to the same period in 2008.
“During these challenging economic times and unprecedented fluctuations in currency rates, we continue to focus on areas of the business that we can control to improve our cash generation and cash allocation,” said Chairman and Chief Executive Officer Michael O. Johnson. “I am very pleased that in these unprecedented economic times, excluding currency fluctuations, our net sales are off less than one percent from a year ago. This is a reflection of the outstanding commitment of our Distributors and the resilience of our business model. We are in a unique position to succeed during economic downturns because we offer an opportunity for part-time or full-time income, and healthy nutrition and weight management products in the midst of a global obesity epidemic. Our message to our distributors is straightforward - have confidence in yourself and our company because there has never been a better time to introduce someone to Herbalife.”
During the first quarter 2009 we added 40,259 new Sales Leaders, which is 17.5 percent lower than the same period in the prior year. Additionally, total Sales Leaders decreased 3.1 percent to 340,714 in the first quarter of 2009 compared to the same period in 2008, which reflects a slight reduction in retention, 40.3 percent as of the requalification period in 2009 versus 41.0 percent in the 2008 requalification period, coupled with fewer new sales leaders in 2009. During the first quarter 2009, the company’s President’s Team membership increased 9.1 percent to 1,197 members versus the first quarter of 2008 and our prestigious Chairman’s Club and China Brand Ambassador membership increased 5.7 percent to 37 members, versus the first quarter of 2008.
Business Highlights
The company hosted three Extravaganzas during the first quarter, in Chile, Colombia and Panama, which were attended by over 18,300 distributors. Additionally the company hosted its annual Honors event in Los Angeles, where 1,500 distributor leaders shared great ideas, trained each other on new business methods, discussed strategies to grow their businesses and participated in the Mark Hughes Bonus awards totaling $36.4 million.
The company presented a “Why Herbalife, Why Now?” tour featuring our chairman and CEO, who traveled to seven U.S. cities during January and four cities in Mexico during March, meeting with more than 30,000 attendees. During the quarter, the company also hosted a “Doctor’s Tour” featuring Dr. Luigi Gratton who traveled to 11 cities and met with close to 10,000 distributors. In addition, our regional management teams and distributor leaders have met with thousands more distributors and potential distributors throughout our Europe, Middle East and Africa, Mexico, South and Central America, Asia Pacific, and China regions.
The North America region reported volume points of 186.5 million in the first quarter of 2009, reflecting an increase of 4.7 percent versus the same period of 2008. Volume point growth in the U.S., the largest country in the region, increased 5.2 percent compared to 2008, reflecting an increase in the Latin and general markets of eight percent and one percent, respectively. New Sales Leaders in the region were 7,893 during the quarter ended March 31, 2009, a decrease of 12.4 percent versus the same period last year. Total Sales Leaders in the region decreased 1.0 percent to 67,097 as of March 31, 2009 versus March 31, 2008.
The Asia Pacific region reported volume points of 145.0 million in the first quarter of 2009, reflecting an increase of 36.4 percent over the same period of 2008. Top markets in this region were Taiwan, with volume point growth of 61.2 percent; Korea, with volume point growth of 57.9 percent; and Malaysia with volume point growth of 58.8 percent, all compared to the same period in 2008. New Sales Leaders in the region were 10,737 during the quarter ended March 31, 2009, an increase of 22.3 percent versus the same period last year. Total Sales Leaders increased 7.0 percent to 64,417 as of March 31, 2009 versus March 31, 2008.
The Europe, Middle East and Africa (EMEA) region reported volume points of 124.1 million in the first quarter of 2009, reflecting a decrease of 9.5 percent versus the same period of 2008. Top markets in this region were Italy, with volume point growth of 9.4 percent and Russia with volume point growth of 1.6 percent, both compared to the same period in 2008. New Sales Leaders in the region were 5,236 during the quarter ended March 31, 2009, a decrease of 19.9 percent versus the same period last year. Total Sales Leaders in the region decreased 10.3 percent to 55,461 as of March 31, 2009 versus March 31, 2008.
The Mexico region reported volume points of 120.4 million in the first quarter of 2009, reflecting a decrease of 18.7 percent versus the same period of 2008. During the third quarter of 2008, the company began collecting a Value Added Tax (VAT) from our Mexican distributors that has had a negative impact on our financial results. Distributors in Mexico previously paid zero percent VAT on their purchases for most of our nutrition products. This effective price increase, which impacts approximately 60 percent of our volume points in the Mexican market, adversely affected sales in Nutrition Clubs, which are retail price-sensitive, and as a result has caused volumes to decline from pre-VAT levels. We are in the process of challenging this assessment on several fronts; however, as the products continue to be subject to this VAT, we expect year-over-year volume growth to be constrained. New Sales Leaders in the Mexico region were 4,351 during the quarter ended March 31, 2009, or 40.8 percent lower than the same period last year. Total Sales Leaders in the region decreased 17.6 percent to 52,136 as of March 31, 2009 versus March 31, 2008.
The South and Central American region reported volume points of 102.6 million in the first quarter of 2009, reflecting a decrease of 13.7 percent versus the same period of 2008. The top markets in this region were Brazil, with volume point growth of 13.8 percent and Venezuela, with a volume point decline of 40.8 percent, both compared to the same period in 2008. New Sales Leaders in the region were 7,715 during the quarter ended March 31, 2009, or 39.6 percent lower than the same period last year. Total Sales Leaders in the region decreased 1.9 percent to 70,532 as of March 31, 2009 versus March 31, 2008.
The China region reported volume points of 20.8 million in the first quarter of 2009, reflecting an increase of 0.5 percent over the same period of 2008. The company is currently licensed for direct sales in six provinces and has submitted applications for five additional provinces. New Sales Employees in China were 4,327 during the quarter ended March 31, 2009, a decrease of 0.5 percent versus the same period last year. Total Sales Employees increased 17.2 percent to 31,071 as of March 31, 2009 versus March 31, 2008. |
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