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Herbalife boosted by upbeat outlook

May 4, 2017

More bad news for Bill Ackman.

Herbalife shares climbed higher in extended trading on Thursday after the the nutrition drinks marketing business lifted its full-year earnings outlook.

The Los Angeles-based company said it expects to earn between $4.05 to $4.45 a share in fiscal 2017, compared with its previous projections of earnings between $3.65 to $4.05 a share. However its outlook for EPS of 85 cents to $1.05 a share in the current quarter was shy of Wall Street forecasts of $1.09.

The company, which has since December 2012 seen Mr Ackman’s Pershing Square hedge fund allege that it is a pyramid scheme, also reported better-than-expected first quarter results. Profits slid to $85.2m or 98 cents a share in the three months ended in March, compared with $95.8m or $1.12 a share in the year-ago period. That topped analysts’ estimates of 75 cents. Adjusting for one-time items, earnings of $1.24 a share topped expectations of 89 cents. Worldwide net sales fell 1.5 per cent from a year ago to $1.1bn, compared with estimates of $1.04bn. Excluding currency impacts, net sales declined in North America, Asia Pacific and South and Central America, while growing in China, Mexico and EMEA.

“Healthy living is a growing aspiration for more and more consumers worldwide and we are well positioned to capitalize on this trend,” outgoing chief executive, Michael Johnson, said. “We offer a powerful person-to-person alternative to traditional retail, where consumers give our distributors permission to help them with our extensive range of nutrition products.”

Last year, Herbalife reached a $200m settlement with the US Federal Trade Commission after an investigation into the group’s practices. While the FTC did not accept Mr Ackman’s claims that the company is a pyramid scheme, it did order changes to Herbalife’s practices.

Herbalife shares, which have rallied more than 29 per cent so far this year, rose 6 per cent in after-hours trade.

http://on.ft.com/2p2E0Kj

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