Herbalife (NYSE:HLF), a leading global nutrition company, today
issued the following statement regarding the strength and integrity
of its business:
Herbalife is first and foremost a company that offers
world class products that people want. Founded in 1980,
Herbalife researches, develops, produces and markets protein
shakes, vitamins and dietary supplements, and energy and fitness
drinks that, when paired with good nutrition and exercise, is a
combination for a healthy, active lifestyle. There is proven
demonstrated demand for Herbalife products by millions of
consumers.
Herbalife has the utmost trust in the integrity of our business
model and that we are in compliance with all applicable laws and
regulations. We are cooperating fully with the FTC and welcome the
opportunity to clear up misinformation in the marketplace.
Herbalife stands behind the quality of our products and
our commitment to member satisfaction and consumer
protection. Herbalife's 'Gold Standard'
consumer-protection rules not only meet, but exceed the standards
prescribed by the Direct Selling Association (DSA), of which the
Company is a long-time member in good standing. The Company
maintains a policy to buy back – for 100% of the purchase price,
plus free return shipping and handling – any products purchased
during the prior 12 months from any individual no longer interested
in retaining their membership. In addition, all new members receive
a letter immediately after joining reminding them of the buyback
protection, and a similar reminder is included in every single
order brochure. In fact, buyback rates in the U.S. have continued
to decline over each of the past four years and is currently below
one quarter of one percent.
Studies have revealed that the vast majority of Herbalife
members have realistic expectations of the business opportunity and
the effort required to succeed at all levels.
Herbalife member-sponsored nutrition clubs play a
positive role in promoting a community-based approach to health and
wellness across the United States. Nutrition clubs advance
Herbalife's mission of helping people lead healthier lives. Our
community-based approach to health and wellness is well recognized
as an important tool in helping create and sustain changes in
behavior – but don't take our word for it. Researchers at the
University of Pennsylvania recruited 166 people to participate in a
weight-loss program either alone or with three friends or family
members. Among those who embarked on the program with friends, 95
percent completed the program compared to only 76 percent of those
who dieted solo. After 10 months, 66 percent of the group
dieters had maintained their weight loss compared to only 24
percent of those who were on their own. Furthermore, the American
Psychology Association has confirmed that "It's easier to stick
with a weight loss plan when you have support."
Herbalife continues to face an unprecedented and unrelenting
attack from Pershing Square to support its $1 billion bet to
manipulate and drive Herbalife's stock price to zero to the
detriment of our investors, members, customers and employees.
Herbalife is confident that the facts are on its side and that it
will overcome Pershing Square's campaign of misinformation about
the Company as the truth about Pershing Square's increasingly
desperate accusations is revealed.
Pershing Square's thesis about Herbalife's business
model is simply false. In fiscal year 2013, Herbalife
reported U.S. Net Sales of approximately $881 million. During that
same period, Herbalife had 525,251 members in the United
States. Under Herbalife's buyback policy, each resigning
members was entitled to return all of their unsold and unconsumed
products and obtain a refund. A pillar of Pershing Square's
thesis is its assertion that there is no genuine consumer demand.
Thus, Pershing Square's thesis is built upon the proposition that
last year, roughly a half million people collectively decided to
simply discard $881 million worth of Herbalife products rather than
get the refund to which they were entitled. And, according to
Pershing Square, this has happened every year for the past 34
years.
Pershing Square's information, presentations and
representations cannot be trusted. Among other
things, it has been widely reported that Pershing Square and its
agents have concealed financial arrangements, misrepresented
affiliations and orchestrated artificial "grassroots" events, all
in an attempt to manipulate Herbalife's stock price for Pershing
Square's financial gain. Pershing Square has shown that there is no
line it will not cross, stating publicly it would take this attack
on Herbalife "to the end of the earth."
Attacks on Herbalife have been clearly orchestrated by Pershing
Square and its agents. Pershing Square's attack on the Company
lacks any impartiality or accountability. Pershing Square has no
duty to any member of the public and is unhindered by the
disclosure obligations imposed upon publicly traded
corporations. With Pershing Square's limited accountability,
in light of the historical regulatory scrutiny placed on Herbalife,
it has made the astonishing claim that it is a "provable certainty"
Herbalife is a massive, sprawling fraud that had gone undetected
for more than 30 years. Pershing Square is claiming that
decades of Herbalife management, and a material number of members
had all kept this secret.
Pershing Square has admittedly spent more than $20 million and
18 months trying to find former Herbalife members from as far back
as 2008 that will complain about their experience with the
Company. In fact, Pershing Square has even been willing to
pay multi-million dollar bounties to anyone willing to generate
negative publicity against Herbalife and support Pershing Square's
agenda.
During this timeframe, more than 1.6 million members have joined
Herbalife in the U.S. If even 1 out of 10,000 of those
members had a complaint, that would yield 1,600 complaints.
The reason why Pershing Square has so few relative voices is
because, as demonstrated through third party studies, the
overwhelming majority of our members have been very satisfied, and
we are proud of that track record. In fact, Pershing Square's
own well-financed campaign to find dissatisfied customers has
actually largely validated our consumer reputation.
Ultimately, Pershing Square's campaign is based on propaganda,
and we look forward to demonstrating that its assumptions will
crumble under serious and independent scrutiny.
Websites
Additional information about Herbalife can be found at
http://www.herbalife.com/global.
The company has also created iamherbalife.com to highlight, in
their own words, the positive impact Herbalife has had on the lives
of the company's members and customers by sharing their
stories.
About Herbalife Ltd.
Herbalife Ltd. (NYSE:HLF) is a global nutrition company that
sells weight-management, nutrition and personal care products
intended to support a healthy lifestyle. Herbalife products
are sold in more than 90 countries to and through a network of
independent members. The company supports the Herbalife Family
Foundation and its Casa Herbalife program to help bring good
nutrition to children. Herbalife's website contains a
significant amount of financial and other information about the
company at http://ir.Herbalife.com. The company encourages
investors to visit its website from time to time, as information is
updated and new information is posted.
FORWARD-LOOKING STATEMENTS
Although we believe that the expectations reflected in any of
our forward-looking statements are reasonable, actual results could
differ materially from those projected or assumed in any of our
forward-looking statements. Our future financial condition and
results of operations, as well as any forward-looking statements,
are subject to change and to inherent risks and uncertainties, such
as those disclosed or incorporated by reference in our filings with
the Securities and Exchange Commission. Important factors that
could cause our actual results, performance and achievements, or
industry results to differ materially from estimates or projections
contained in our forward-looking statements include, among others,
the following:
- our relationship with, and our ability to influence the actions
of, our Members;
- improper action by our employees or Members in violation of
applicable law;
- adverse publicity associated with our products or network
marketing organization, including our ability to comfort the
marketplace and regulators regarding our compliance with applicable
laws;
- the outcome of inquiries from regulatory authorities;
- changing consumer preferences and demands;
- our reliance upon, or the loss or departure of any member of,
our senior management team which could negatively impact our Member
relations and operating results;
- the competitive nature of our business;
- regulatory matters governing our products, including potential
governmental or regulatory actions concerning the safety or
efficacy of our products and network marketing program, including
the direct selling market in which we operate;
- legal challenges to our network marketing program;
- risks associated with operating internationally and the effect
of economic factors, including foreign exchange, inflation,
disruptions or conflicts with our third party importers, pricing
and currency devaluation risks, especially in countries such as
Venezuela;
- uncertainties relating to the application of transfer pricing,
duties, value added taxes, and other tax regulations, and changes
thereto;
- uncertainties relating to interpretation and enforcement of
legislation in China governing direct selling;
- uncertainties relating to the interpretation, enforcement or
amendment of legislation in India governing direct selling;
- our inability to obtain the necessary licenses to expand our
direct selling business in China;
- adverse changes in the Chinese economy, Chinese legal system or
Chinese governmental policies;
- our dependence on increased penetration of existing
markets;
- contractual limitations on our ability to expand our
business;
- our reliance on our information technology infrastructure and
outside manufacturers;
- the sufficiency of trademarks and other intellectual property
rights;
- product concentration;
- changes in tax laws, treaties or regulations, or their
interpretation;
- taxation relating to our Members;
- product liability claims;
- whether we will purchase any of our shares in the open markets
or otherwise; and
- share price volatility related to, among other things,
speculative trading and certain traders shorting our common
shares.
We do not undertake any obligation to update or release any
revisions to any forward-looking statement or to report any events
or circumstances after the date hereof or to reflect the occurrence
of unanticipated events, except as required by law.
CONTACT: Herbalife Ltd.
Barbara Henderson, 213-745-0517
SVP, Worldwide Corp. Communications
or
Amy Greene, 213-745-0474
SVP, Investor, Corporate and Government Relations
Herbalife (NYSE:HLF)
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