Herbalife Ltd. (NYSE:HLF), the controversial multilevel marketing company (MLM) offering nutritional and weigh management products, continues to deliver solid earnings, an indication that it is not affected by the ongoing calls for investigation regarding its alleged deceitful business practices.

Herbalife

Herbalife investigations

Over the past several months, different Latino civil rights activist groups urged the Federal Trade Commission (FTC) to investigate Herbalife Ltd. (NYSE:HLF). They also protested during the company’s recent Latina Extravaganza sales event in Los Angeles and circulated letters to the independent distributors that informed them regarding their right to demand changes such as limiting down line compensation to three levels deep, and stop featuring highly unlikely rags to riches success stories.

The activists also demanded the Attorney General of California to look into the alleged predatory business practices of Herbalife Ltd. (NYSE:HLF). Most recently, an ad hoc coalition of consumer advocates sent a petition to the FTC demanding a crackdown on the MLM industry amid the increasing calls to investigate Herbalife. The petitioners argued that the industry failed to regulate itself, and widespread deceptive claims continue to cause financial harm to the poorest and most vulnerable consumers.

Despite all the negative issues surrounding Herbalife Ltd. (NYSE:HLF), the company’s net income increased by 27% during the third quarter. The company said its net income rose from $111.9 million or $0.98 earnings per share to $142 million or $1.32 earnings per share. Its earnings beat the consensus estimate of $1.41 per share based on data compiled by Bloomberg.

Herbalife sales increase

The company’s total sales increased by 19% to $1.21 billion, slightly higher than the $1.20 billion consensus estimate. Herbalife Ltd. (NYSE:HLF) is anticipating that earnings this year will increase from its previous forecast of $4.95 per share to $5.23. Its full year guidance is higher than the $4.98 average estimate of analysts.

Timothy Ramey, analyst at D.A. Davidson noted that the controversies surrounding Herbalife Ltd. (NYSE:HLF) did not affect the earnings of the company for the third quarter. According to him, “Results were driven by volume and Sales Leaders each growing 13%. The Pershing Square attack on HLF’s business does not appear to be impacting the company’s ability to recruit new distributors.”

Profits in North America decline

On the other hand, Barclays analyst Merideth Adler observed that the sales trend of the company in North America declined slightly, but it still remains almost 10%. She said the management of the company is comfortable with that number “given the amount of bad publicity” in the United States particularly the “loudly-expressed views” of Bill Ackman of Pershing Square Capital Management. Ackman alleged that Herbalife Ltd. (NYSE:HLF) is a pyramid scheme.

Dr. Richard Carmona, M.P.H., FACS, and 17th Surgeon General of the United States was appointed as member of the board of directors of Herbalife. He has 40 years’ experience in medicine, nutrition, preventative health and business.

Herbalife CEO Michael Johnson said the company is implementing a new program to ensure that all of its distributors are aware of its protection and core rules. He said the changes should eliminate the vast majority of misconceptions and misrepresentations about the company.

The stock price of Herbalide Ltd (NYSE:HLF) is down by more than 2% to $66.05 a share as of this writing around 12:57 p.m. in New York.