Herbalife shares swing after big earnings beat
Herbalife shares vacillated Thursday in extended hours trading after the company reported quarterly earnings that significantly beat analysts' expectations.
The weight loss and nutrition products firm posted fourth-quarter adjusted earnings per share of $1.41 on revenue of $1.13 billion. Analysts had expected Herbalife to report earnings of about $1.22 a share on $1.16 billion in revenue, according to a consensus estimate from Thomson Reuters.
The company's stock dipped in after-hours trading right after the earnings were released, but quickly rebounded to a more than 6 percent gain. The stock then fell again to a modest loss.
"2014 was a record year in terms of net sales, volume and sales leader retention," Michael Johnson, Herbalife's chairman and CEO, said in the company's earnings release. "It was also a year of transition, as we continue to implement changes that we believe will create a stronger company with the ideal combination of growth and sustainability."
"We have seen the success of these changes in early adopter markets and remain confident that our other markets will follow a similar pattern through 2015 and beyond," he added.
Exchange rates took a major toll on the company's performance.
Herbalife's fourth-quarter worldwide net sales of $1.1 billion represented an 11 percent decrease from the same time in the prior year. Excluding currency impacts, however, net sales were flat compared to that same period, the firm said.
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The company revised its guidance in part because of the currency situation "faced by all global companies," Johnson said.
Herbalife said it expects a negative impact of about 28 cents to first quarter earnings, including approximately 10 cents resulting from Venezuela. For its full year guidance, the company said it expects a currency headwind of about $1.19, including approximately $0.45 from Venezuela.
The company said it expects first-quarter diluted earnings ranging from $1.00 to $1.10 per share. For fiscal year 2015, Herbalife guided for earnings from $4.10 to $4.50 per share.
Herbalife shares have fallen about 50 percent in the past year as the weight loss and nutrition products company has continued to suffer public attacks from hedge fund manager Bill Ackman.
Ackman, who has previously named the firm "a travesty and also a tragedy," recently called his public short position "philanthropic" because it exposes what he alleges is a pyramid scheme. The Federal Trade Commission is investigating these claims, and Johnson said last year "this is a war."
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Protesters even took to the streets Thursday outside the Manhattan office of billionaire investor Carl Icahn. The demonstration called for Icahn to sell his Herbalife shares because of what they alleged were the company's fraudulent practices that have damaged some of its Latino salespeople.
A counter-protest ensued as other demonstrators holding signs in support of Herbalife came to the site.
"We believe we are executing the right long-term strategy and are confident in our ability to create sustainable value for our shareholders and the millions of Herbalife members and their customers worldwide," Johnson said in the earnings release.