Yahoo Finance Herbalife raises guidance; Eliminates dividend
Herbalife raises outlook for year; eliminates dividend to focus on buying back stock
LOS ANGELES (AP) -- Herbalife Ltd. raised its earnings guidance for the year after its adjusted first-quarter net income beat Wall Street's estimate.
The seller of supplements and weight-loss products also said that it would eliminate its quarterly dividend payment and instead focus on repurchasing stock. Herbalife executives said they plan to repurchase $581 million common shares in the second quarter as part of a previously announced $1.5 billion repurchasing program.
Herbalife shares have dropped 25 percent in 2014 as investors worry about probes into the company's business practices. Last month the direct seller disclosed that it is being investigated by the Federal Trade Commission for possible "deceptive practices."
Hedge fund manager Bill Ackman, who has bet against the company, has been pushing regulators and lawmakers to investigate Herbalife's business model, which he calls a "pyramid scheme," alleging that it makes most of its money by recruiting new salespeople rather than on the actual products they sell. It is a charge that Herbalife has repeatedly denied.
Herbalife, which is incorporated in the Cayman Islands and based in Los Angeles, uses a network of distributors to sell its nutritional supplements and weight-loss products.
The company raised its full-year earnings guidance to between $6.10 and $6.30 per share, ahead of the average analyst estimate of $6.04 per share, according to FactSet.
In the latest quarter, profit fell to $74.6 million, or 74 cents per share, from $118.9 million, or $1.10 per share, in the first quarter of 2013. The decline was mostly due the tumultuous economic situation in Venezuela, where an exchange rate loss has affected many U.S. companies.
Excluding those and other one-time events the company would have earned $1.50 per share. Wall Street analysts estimated $1.30.
Revenue rose 12 percent to $1.26 billion, ahead of analysts' projection of $1.24 billion.
Shares slipped 15 cents in the aftermarket after gaining $1.02, or 1.8 percent, to $58.85 in regular trading.
