Global nutrition company Herbalife Ltd. HLF has appointed Dr. Francis Gregory Samonte to its Nutrition Advisory Board (NAB), which now includes 30 members. Samonte is an expert in pediatric neurology and is the first Filipino to join the board, which already has leading experts from around the world in the fields of nutrition and health.
Based in Manila, Samonte has been awarded the Chairman’s Achievement Award, Department of Pediatrics, University of Louisville, KY, and his affiliations include the Philippines Medical Association. Apart from a successful career in medicine, Samonte is also involved in charities, being a member of the Board of Directors of Community Based Resources in Zambales.
The appointment of Samonte adds to the number of nutrition and health experts from Asia Pacific in the Nutrition Advisory Board who will help to raise public awareness and lead educational programs on balanced nutrition and healthy active lifestyle in 15 countries across the region.
Overall, we are impressed with Herbalife’s results as the company has been witnessing volume improvement in three of its four key markets - the U.S., Mexico and Brazil. However, it continues to face volume declines, particularly in the Americas region, which is weighing on its sales. Unfavorable currency is also a major headwind for the company.
In the third quarter of 2015, its earnings beat the Zacks Consensus Estimate on the back of higher sales in China while revenues missed the same on currency headwinds. The company raised its earnings guidance for 2015, but lowered expectations for 2016 due to continued struggle in some of the markets and currency headwinds.
Herbalife’s shares have been on a roller coaster ride since activist investor William Bill Ackman started accusing it of being a pyramid scheme i.e. it employs deceptive marketing practices for improving business. Ackman believes that the nutrition clubs run by Herbalife's distributors focus on recruitment instead of selling products.
Ackman's back-to-back allegations have prompted investigations by the Securities and Exchange Commission, Federal Trade Commission, FBI and at least two state attorneys general. But none so far has taken any action. Herbalife, on its part, has been denying the charges and has full confidence in its business model. In the recent months, Herbalife has strengthened its own public campaign against Ackman, prodding regulators to investigate Ackman’s business practices. However, repeated allegations by Ackman do impact the company’s reputation and share price.