Close

Not a member yet? Register now and get started.

lock and key

Sign in to your account.

Account Login

Forgot your password?

Herbalife Whisper

Herbalife Whisper
 

Research Question: Are consumers and distributors backing off from buying Herbalife products so far in Q3 as scrutiny continues for safety issues and its possible pyramid scheme?

Companies Covered: Herbalife (HLF)

Report Available: Sept. 11, 2013

 

Blueshift’s continued research indicates HLF’s successful business model being increasingly scrutinized by the media and public due to recent allegations and the continued feud over its Multi-Level-Marketing (MLM) distribution model, which has the potential to influence consumer behavior as more individuals become apprised to the concerns held about the company.

 

Observations

  1. HLF’s recent earnings call boasted an 18% increase in sales year-over-year with growth coming from each of its six regions.  HLF also discussed its robust global expansion plans, including the Chinese market, which has the potential to drive significant sales growth. The MLM distribution model used by HLF is illegal in China, but HLF changed its model for the market and opened retail locations throughout the country. The success in the market could indicate viability of product outside of the controversial MLM model of distribution.
  2. HLF is under significant media scrutiny after recent events, including a metal contamination in its top selling Formula 1 shake, which raised concerns over consumer health, and overall regulations and industry standards at the plant. In addition, the company was linked to a suspected pyramid scheme in Canada, aiding the already fiery battle over whether the company is a pyramid scheme itself. While there are still variant interpretations regarding the company’s business model in the marketplace, the feud between Bill Ackman and Carl Icahn exemplifies divergent opinions of investors regarding the company.
  3. Blueshift’s Oct. 2012 and Feb 2013 reports on HLF have been positive for the company, debunking Ackman’s thesis along the way. HLF distributors are loyal to the company, its products, and noted expectations for continued sales growth in 2013. Distributor sources are not being pressured or recruited to sell the products. In fact, some became HLF distributors purely for the discount. They are satisfied with HLF’s support and do not know of any who are lying about sales figures.

 

Blueshift will gather data and issue a market research report from independent sources in the following areas: Herbalife distributors, MLM specialists, customers, and competitors.

 

To see other ideas Blueshift Research is currently working on, please click here.