Herbalife Profit Down, Outlook Weak; Shares Tank 13%

(RTTNews) - Shares of Herbalife Ltd. (HLF) tanked 13 percent in extended trading hours on Monday, after the nutrition supplements company's third-quarter profit declined sharply and detailed a soft outlook moving ahead.

Herbalife reported a plunge in profit for the third quarter, hurt largely by heavy loss tied to the devaluation of Venezuelan assets, with earnings and revenues falling short of Wall Street expectations. Moving ahead, Los Angeles, California-based Herbalife forecast a weak outlook for the fourth quarter while lowering its guidance for full-year 2014.

Herbalife, a multi-level marketing company that sells nutritional supplements and energy drinks, has been at the center of attention for investors ever since William Ackman, the activist manager of hedge fund Pershing Square, called it a pyramid scheme that would fail soon. Ackman's allegations have led to federal probes against Herbalife. The company's has witnessed sharp swings in its stock price.

Herbalife's third-quarter profit dropped to $11 million or $0.13 per share from $142 million or $1.32 per share last year. Results for the quarter included $139.5 million in charges related to the re-measurement of Venezuelan Bolivar denominated assets and liabilities and $17.5 million related to legal reserve.

Adjusted earnings for the quarter were $125.1 million or $1.45 per share, but well short of analysts' mean estimate of $1.51 per share. Analysts' estimates typically exclude one-time items.

Revenues for the third quarter grew 4 percent to $1.26 billion from $1.21 billion a year ago. Analysts had a consensus revenue estimate of $1.32 billion for the quarter.

Volume growth were flat in the quarter, as North America dropped 4 percent, Asia Pacific increased 3 percent, EMEA rose 15 percent, China improved 24 percent, and South and Central America declined 17 percent.

Chief Executive Michael Johnson said, "In the quarter we saw volume increases in two-thirds of our 91 countries, especially Russia and China. Excluding the impact of currency translation in Venezuela, the company had solid increases in both volume and net sales."

Looking forward to the fourth quarter, the company expects earnings of $1.30 to $1.40 per share and a sales decline of 5 percent to 8 percent. Analysts currently expect adjusted earnings of $1.69 per share on sales growth of 8.2 percent.

For the full year 2014, Herbalife now expects adjusted earnings of $5.80 to $5.90 per share on sales growth of 3.5 percent to 4.3 percent. Analysts currently expect earnings of $6.26 per share on sales growth of 9 percent for 2014. The company had previously projected earnings of $6.17 to $6.32 per share on sales growth of 8.5 percent to 10.5 percent.

For the full year 2015, Herbalife expects earnings of $5.45 to $5.75 per share and sales estimated in a range between a decline of 1 percent and an increase of 2 percent. Analysts currently expect earnings of $7.22 per share on sales growth of 7.3 percent for 2015.

HLF closed Monday's trading at $55.90, up $3.44 or 6.56%, on the NYSE. The stock, however, plunged $7.13 or 12.75%, in the after-hours trade.