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UPDATE 2-Herbalife says 2nd-qtr sales to fall more than expected
June 5, 2017 / 12:11 PM / 6 months ago

UPDATE 2-Herbalife says 2nd-qtr sales to fall more than expected

(Adds shares, details on sales forecast; changes dateline to June 5)

June 5 (Reuters) - Herbalife Ltd said on Sunday it expects current-quarter revenue to fall more than previously expected, after sales were hurt amid efforts by the nutritional supplement maker to comply with regulatory requirements related to its business practices.

Shares of Herbalife were down 5 percent at $70.25 in premarket trading on Monday.

The company said it expected sales to fall 2-6 percent in the second quarter ending June 30, a steeper fall than the 0.5-4.5 percent decline it had earlier expected.

Herbalife said sales were hurt by the impact of new technology and tools that were put in place to better document sales following an agreement with the U.S. Federal Trade Commission (FTC).

The company also blamed softer sales in Mexico for the new forecast.

Under a July 2016 agreement with the FTC, Herbalife agreed to pay $200 million and change the way it does business to avoid being labeled a pyramid scheme following criticism of its sales methods.

The settlement had come as a blow to billionaire investor William Ackman, who had accused Herbalife of being a pyramid scheme.

At the time of the agreement, Herbalife had a massive network of independent distributors selling powdered shakes, vitamins and other tablets designed to help people manage their weight, boost energy and calm stress. Under that business model, some people got more money for recruiting new distributors than selling products.

Among other requirements, the FTC had asked Herbalife to ensure that 80 percent of its annual sales were from documented purchases of nutritional products by consumers.

The company said on Sunday 90 percent of its U.S. sales last month represented such purchases.

Herbalife also said it now expects adjusted profit of 95 cents-$1.15 per share for the second quarter, up from an earlier forecast of 88 cents-$1.08 per share. (Reporting by Subrat Patnaik and Sruthi Ramakrishnan in Bengaluru; Editing by Sunil Nair and Sai Sachin Ravikumar)

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