How Big of an Impact Will the Coronavirus Have on Herbalife?

When Herbalife Nutrition Ltd. (NYSE: HLF) released its fourth-quarter financial results after the markets closed on Tuesday, the company said that it had $0.74 in earnings per share (EPS) and $1.22 billion in revenue. The consensus estimates had called for $0.63 in EPS and $1.22 billion in revenue. In the same period of last year, Herbalife posted $0.34 in EPS and $1.19 billion in revenue.

In terms of its segments, the company reported as follows:

• Asia Pacific net sales increased 17.8% year over year to $330.4 million. Volume point values increased 17.6%.
• EMEA net sales increased 3.5% to $241.1 million, and volume point values increased by 3.5%.
• North America net sales increased 8.9% to $233.6 million, and volume point values increased by 6.9%.
• Mexico net sales increased by 1.8% to $116.6 million, and volume point values decreased 3.8%.
• China net sales decreased by 15.0% to $205.9 million, and volume point values decreased by 12.6%.
• South & Central America net sales decreased 9.1% to $92.7 million, and volume point values decreased 6.0%.

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Herbalife did not offer guidance but it did say that the coronavirus could have a material impact on the first quarter and the 2020 full year. The company said it will update its guidance for the 2020 full year when it can reasonably estimate the impact. Consensus estimates are calling for $0.69 in EPS and $1.22 billion in revenue for the first quarter.

Also during this past quarter, Herbalife announced that John Agwunobi, who as previously announced will become CEO effective March 30, 2020, will also assume the role of board chair, effective upon his election to the board of directors at the upcoming annual meeting of shareholders. Michael Johnson will retire as chair and chief executive after 17 years at the company.

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Johnson commented:

As I close out my tenure as Chairman and CEO and prepare to hand off both of these positions to John Agwunobi, I want to express my sincere gratitude to our distributors and employees who have worked so hard to advance our mission to change lives and communities around the world. It has been an honor to serve and see the growth of this great company over the last 17 years. This growth and momentum continued in 2019 resulting in record volume points for the full year; and in the fourth quarter, nine of our top ten countries achieved net sales growth.

Herbalife stock traded up about 2% at $39.63, in a 52-week range of $33.62 to $58.22. The consensus price target is $55.00.

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