NPR Segment Briefly Addresses Herbalife Ltd. (HLF) Controversy

NPR Segment Briefly Addresses Herbalife Ltd. (HLF) Controversy

NPR’s Where We Live took a quick look at Herbalife Ltd. (NYSE:HLF) this week, and presenter John Dankosky asked the right questions, but the non-answers he got in return from Senior Director of Corporate Communications for Herbalife North America Marco Gonzales show exactly why the short sellers refuse to back down.

Herbalife rep won’t say how many distributors are making money

Dankosky starts off by asking Gonzales how he responds to criticism that the vast majority of people who get involved in Herbalife Ltd. (NYSE:HLF) never make a dime, and he gives the usual answer that 75% of the people who sign up are actually just interested in the product for personal consumption and don’t have any particular interest in reselling the shakes for a profit, so the claim that 99% off people lose money is a mischaracterization. This percentage has moved around over time without a clear explanation, Gonzales cites “independent research studies that we did” which is a contradiction in terms, but it’s the response that we’re all accustomed to.

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Dankosky follows up by asking how many people actually make money through Herbalife Ltd. (NYSE:HLF), and Gonzales doesn’t give an answer. He says that 25% of distributors will work on a part-time or full-time basis at some point, that MLM is a multi-billion dollar business, and that sometimes people need a little extra cash in their pockets.

But he never actually says how many of those full and part-time workers end up with some of the industry’s billions in their pockets, and this glaring omission really is at the heart of the Herbalife Ltd. (NYSE:HLF) short.

Herbalife could shut down short sellers with more transparency

The rest of the segment is what you would expect from anyone who has been following the Herbalife Ltd. (NYSE:HLF) story. Dankosky brings on a former distributor who had a bad experience with the company (mentioning the wellness clubs, Club 100, and pressure from local distributors to start selling), Gonzales talks up Herbalife’s return policy and says that these stories are the exception.

All that may be true, but the lack of transparency about who is consuming, who is selling, and the business prospects of the former group is what keeps wind in the short sellers’ sails. If Herbalife Ltd. (NYSE:HLF) wants to shut them down it seems like it should be easy enough to provide those details.

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Michael has a Bachelor's Degree in mathematics and physics from Boston University and Master's Degree in physics from University of California, San Diego. He has worked as an editor and writer for several magazines. Prior to his career in journalism, Michael Worked in the Peace Corps teaching math and science in South Africa.
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