Herbalife Ltd. CEO: Company Will Become Stronger After FTC Probe


Michael Johnson, the chief executive officer of Herbalife Ltd. (NYSE:HLF) is confident that he multilevel marketing company that sells supplements and weight loss products accused of operating a pyramid scheme will become stronger after the investigation of the Federal Trade Commission (FTC).

Truth will prevail

During an interview with LA Times after the company’s annual meeting, Johnson said once the FTC finished its investigation, it will be a great day for Herbalife Ltd. (NYSE:HLF). According to him, “I think it’s going to clear the air, and I think it’s going to be a very good day for Herbalife when this is all cleared up. I’m a great believer that the truth will prevail to the positive for us.

“If they come to us and say, ‘You could have done this better,’ we’ll fix it. There’s nothing structurally wrong with this company,” added Johnson.

Best opportunity to repurchase Herbalife’s shares

The board of directors of Herbalife Ltd. (NYSE:HLF) implemented several steps to reassure investors regarding its future. The company terminated its quarterly dividend to accelerate its stock buyback. For the second quarter, it will repurchase $581 million worth of its shares as part of its previously announced $1.5 billion shares buyback program. The company already completed the purchase of $225 million worth of shares last April 25.

Johnson previously stated, “Our strong sustained financial performance and the current market valuation of our shares make repurchasing stock the most attractive method of returning capital to shareholders and reflects our continued commitment to creating long-term value for our shareholders.”

He also made it clear that the accelerated stock buyback was not part of a plan to take Herbalife Ltd. (NYSE:HLF) private. “There’s not a strategy on our part to do that. What we’re doing is buying back cheap shares because we think that’s the best opportunity there is.”

Investigations made Herbalife stock more volatile

The stock price of Herbalife Ltd. (NYSE:HLF) declined more than 24% year-to-date. Over the past 52-week range, the shares of the company traded as high as $83.51 per share. The stock is trading around $59.64 per share, down by 0.57% at the time of this writing around 12:34 in the afternoon in New York.

Since the FTC and the Securities and Exchange Commission (SEC) announced that Herbalife Ltd (NYSE:HLF) is under investigation, the stock became more volatile. The Illinois Attorney General is also conducting an investigation against the company. There had been reports that the Department of Justice (DOJ) and the Federal Bureau of Investigation (FBI) also launched an inquiry regarding allegations that the company is operating a pyramid scheme.

Last March, the number of investors shorting or betting against the shares of Herbalife Ltd. (NYSE:HLF) increased 13.4%, according to the data from Analyst Ratings.net.

Johnson said they are not aware about the reported DOJ or FBI investigation. According to him, “We have no knowledge of any ongoing investigation. We haven’t received anything formal or informal from either agency.”

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About the Author

Marie Cabural
Marie received her Bachelors Degree in Mass Communication from New Era University. She is a former news writer and program producer for Nation Broadcasting Corporation (NBC-DZAR 1026), a nationwide AM radio station. She was also involved in events management. Marie was also a former Young Ambassador of Goodwill during the 26th Ship for Southeast Asian Youth Program (SSEAYP). She loves to read, travel and take photographs. She considers gardening a therapy.

4 Comments on "Herbalife Ltd. CEO: Company Will Become Stronger After FTC Probe"

  1. I was never in Herbalife. LOL

  2. tex2 it sounds like you weren’t very successful with herbalife and have an ax to grind. Many people sign up and then think they don’t have to work at it. It’s actually hard work but it does pay off. Sorry you didn’t make it. Not everybody has the persistence needed to take a less than $100 franchise and make it work. But many do. Oh and by the way nobody has to buy inventory. If you were silly enough to do that, sorry for you. Not required.

  3. Sounds like an admission of guilt. Herbalife operates very similar to Amway, the largest MLM scam on the planet: http://www.stoptheamwaytoolscam.wordpress.com

  4. Sounds like an admission of guilt. Herbalife operates very similar to Amway, the largest MLM scam on the planet. Google “stop the amway tool scam wordpress”

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