Mexico, U.S. Spark Herbalife 3Q Gains

LOS ANGELES—Herbalife Ltd. (NYSE:HLF) posted an 18.8-percent increase in third quarter (3Q) revenues, reaching $476.4 million on the strength of the sales performance in the company’s two largest markets—Mexico and the United States— which grew 66 percent and 25 percent, respectively. On the top-line growth, net income for the period would have risen 57 percent to $38.1 million or $0.51 per share, but an after-tax expense of $14.3 million, related to mid-2006 debt financing, dropped actual earnings to $26.5 million or $0.36 per share from $27.1 million or $0.37 per share a year ago.

In addition to undergoing debt financing, the company logged $23.5 million in capital expenditures during the quarter, including investments in relocating its regional headquarters in Los Angeles, developing its e-commerce platform, enhancing its management information systems, and investing in additional infrastructure in China.

Herbalife (www.herbalife.com) also reported the recent reorganization of its geographic units, which are up from four units to seven—Europe, Middle East/Africa (EMEA); Mexico and Central America; North America; South America and Southeast Asia (SAM/ SEA); Greater China; North Asia; and Brazil. The company explained the reduced management layers in the new structure facilitate faster decision-making and improved sharing of ideas to accelerate growth in high potential markets. North Asia and the EMEA were the only regions posting percentage sales declines for the quarter, owing partially to sales drops in Germany, The Netherlands and Japan.

“I am pleased with the strong sales growth we have generated in our top markets,” said Michael O. Johnson, chief executive officer (CEO). “We believe our innovative distributor business methods, combined with engaged leadership and high-quality products will continue to serve as the primary sales drivers in our existing markets.”