Herbalife Ltd. Strikes Ackman Once Again

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Herbalife Ltd. (NYSE:HLF) continues to duel Bill Ackman with words, denying his accusations that it is a pyramid scheme and that it profits off low income communities. Today, in response to Ackman’s announcement that he is planning yet another press conference about Herbalife, the company has issued a long statement saying that Ackman and his firm’s claims are simply false.

Herbalife touts its products

A good portion of the statement is used to simply tout the company’s products. Herbalife said it is cooperating with the Federal Trade Commission’s investigation and does “welcome the opportunity to clear up misinformation in the marketplace.” The company added that it exceeds the Direct Selling Association’s standards for consumer protection and that it will buy back any product bought within the previous 12 months from those who wish to close out their membership.

“Studies have revealed that the vast majority of Herbalife members have realistic expectations of the business opportunity and the effort required to succeed at all levels,” the statement reads.

It does not give any specifics any of these supposed studies, however. This is important to note because of accusations that Herbalife distributors have been setting falsely high expectations regarding results for those interested in becoming distributors.

The multi-level marketing company goes on to cite a couple of positive studies regarding weight loss programs in general, which by the way don’t seem to have a direct connection to Herbalife’s products.

Herbalife says Ackman’s wrong

Herbalife accuses Ackman’s firm of a “campaign of misinformation about the Company as the truth about Pershing Square’s increasingly desperate accusations is revealed.” The company calls the firm’s thesis about its business model “simply false” and then goes on to cite its financial numbers.

In the U.S., Herbalife had about $881 million in net sales and more than 525,000 members in the U.S. The company reiterated that members who resigned could return all their unsold and unconsumed products for a refund.

“Pershing Square’s thesis is its assertion that there is no genuine command,” Herbalife wrote. “Thus, Pershing Square’s thesis is built upon the proposition that last year, roughly a half million people collectively decided to simply discard $881 million worth of Herbalife products rather than get the refund to which they were entitled. And, according to Pershing Square, this has happened every year for the past 34 years.”

LULAC plans protest of Herbalife extravaganza

Tomorrow, Herbalife is holding a member extravaganza in Chicago, and the League of United Latin American Citizens (LULAC) is planning a protest at that event. According to LULAC, the problem is that so many of those who are taken in by Herbalife don’t speak English very well, so they may not fully understand the laws and rights that protect them.

“Herbalife’s financial success is built on defrauding hardworking men and women in Illinois. The pizzazz and glamour of this extravaganza only helps to promote Herbalife’s get-rich-quick scheme to appeal to the most vulnerable members of our community,” said Elizabeth Guerrero, Field Manager with the Brighton Park Neighborhood Council, in a statement.

Herbalife: Pershing Square can’t be trusted

The nutritional supplements company states that Pershing Square has “concealed financial arrangements, misrepresented affiliations and orchestrated artificial ‘grassroots’ events, all in an attempt to manipulate Herbalife’s stock price for Pershing Square’s financial gain.”

The company states that none of the firm’s statements are true and says that if its members were truly unhappy, it would have received more complaints from them. It also states that its representatives “look forward to demonstrating that its [Pershing Square’s] assumptions will crumble under serious and independent scrutiny.” There was no information provided regarding how Herbalife will do this.

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