Herbalife Ltd. (HLF): A Changing Message To Distributors?

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Herbalife Ltd. (NYSE:HLF) changing their messaging? Both the distributors and Carl Icahn seem confused. We look at the evolving Herbalife message and specifically look at comments which Carl Icahn has made.

Herbalife Ltd. (NYSE:HLF) used to stress that it was a job opportunity and that it has many customers outside of its distributor network. During the past year they have changed their messaging and have said that most distributors sign up to get a product discount.

herbalife Ltd. HLF

  • ·         “Discount buyers […] have signed signed up as distributors to enjoy a discount on their purchases […] were approximately 47%. [HLF 10-K for 2010]


  • ·         “Discount buyers […] have signed signed up as distributors to enjoy a discount on their purchases […] were approximately 29%.” [HLF 10-K for 2011]


  • ·         According to Herbalife Ltd. (NYSE:HLF) ’s 8-K Form Filing in May, 2012, “discount buyers were 27 percent (distributors who receive a 25 percent discount)” [HLF 8-K for 2012]


  • ·         Kate Kelly: “Can you give us a percentage figure though, Mr. Johnson, as to what percentage of your sales are outside that distribution network?” //Michael Johnson: “90%.” //Kate Kelly: “So the vast majority?” //Michael Johnson: “Absolutely.” [Michael Johnson on CNBC 12.19.12]


  • ·         “Our distributors are club members, just like Costco…” [Des Walsh on CNBC 1.10.2013]


  • ·         Referring to his previous “90%” figure, “It was a misstatement.”/ “90% buy for one reason…self-consumption.”[Michael Johnson on CNBC 1.10.13]


  • ·         Herbalife just launched a new website (iamherbalife.com) which says “Most members join simply to receive a discount on products they consume; some join to make part-time income as well, and a small percentage join in search of full-time income.”


Herbalife Ltd. (NYSE:HLF) is changing its story so frequently that even its biggest shareholder is confused about whether it’s a job opportunity or a discount club.


  • ·         Carl Icahn to NY Post: “I believe it’s a great business model, and a lot of people depend on the money they earn from Herbalife.  It would hurt a lot of poor people if Herbalife went out of business.”  [New York Post, 3/25/14]


  • ·         Carl Icahn to Fox Business: “The irony is that Ackman has this mantle, he’s saving Hispanic people.  He’s hurting them because a lot of Hispanic people, women that can’t get jobs, are making money from this and not illegally and not wrongly.”  [Fox Business, 3/24/14]


  • ·         Carl Icahn to CNBC: “Actually the irony is that Herbalife gives people that are unemployed work.  They take, you know a minority group, say you talk about the Spanish, whatever.  And I think there are a lot of people that are unemployed, that can’t get jobs.  I mean, women with a family, with babies, single mothers, and they go sell this product and they make money from it. … And it employs a lot of people.”  [CNBC, 3/25/14]

See a great clip on this topic from Herb Greenberg below

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