Herbalife's Revamped Marketing May Weigh On Q4 Sales

Herbalife Ltd. HLF, the multi-level marketing company slated to post earnings after the bell, has missed Wall Street's expectations in each of the past two quarters. In the midst of an ongoing investigation by the Federal Trade Commission, Herbalife recently put new limits on the amount of products that new salespeople can acquire from the company. Chief executive Michael O. Johnson said in November that the revamped markeing plan "may continue to moderate near-term volumes and sales growth." But Johnson added that the new limits "enhance the experience of our members and their customers, and position us for even greater future success." The company forecast that fourth-quarter sales would range from flat to a decline of 3 percent. Herbalife changed hands recently little changed at $33.84. Shares are off 23 percent since November. The FTC launched its investigation in March, demanding documents concerning its advertising and marketing dating back to 2009. Other state and federal regulatory agencies are reportedly investigating against the backdrop of a long-standing shorting campaign by hedge fund maven Bill Ackman, who has repeatedly called Herbalife a "pyramid scheme." Herbalife has said it is cooperating with the FTC and the issues "may take several years to resolve." Despite a cloudy future, four out of six analysts following the company maintain Buy ratings, with two at Hold. Long-time Herbalife bull Timothy S. Ramey, now of Pivitol Research, earlier this week called the stock "very cheap" and said the FTC probe is most likely to come up short. Wall Street expects fourth-quarter adjusted earnings of $1.22 a share, on revenue of $1.16 billion In the year-earlier period Herbalife posted adjusted earnings of $1.16 a share on revenue of $1.27 billion.