Business

Herbalife shows strong results despite investor feud

Nutritional products giant Herbalife said its better than-expected earnings and rosy 2013 outlook were driven by a fast-growing global distributor network and strong demand for its weight-loss shakes and supplements.

All the recent publicity over the company's business model did not hurt, either, Herbalife president Des Walsh said.

"Despite all the noise on Wall Street, we saw a record number of 80,000 new distributors in the US in the second quarter," said Walsh.

"Now, more people who are aware of what's happening have taken time to understand our business, and with that comes an acknowledgment of the legitimacy of our products," he added.

Herbalife, whose weight-loss and nutrition products are sold through a network of independent individuals all over the world, has spent much of 2013 caught in the crosshairs of two Wall Street titans.

In December, Bill Ackman, who heads Pershing Square Capital, made a public bet against US$1 billion worth of Herbalife stock and accused the company of being a "pyramid scheme".

Activist investor Carl Icahn, on the other hand, stood by Herbalife and put two of his representatives on its board of directors.

Ackman's early remarks caused the company's shares to plummet to about US$25 from US$45 late in the year. But the stock recovered to hit 12-month highs of US$62.23 last Tuesday and neared US$64 in extended trading after the company announced its second-quarter results yesterday.

If this surge continues, Ackman's short position could become highly unfavorable. Ackman's spokeswoman did not immediately comment on the results. - Reuters, July 30, 2013

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