Herbalife is a worldwide nutritional marketing organization which primarily markets and sells personal care products, healthy dietary supplements, weight loss, and management products and generally give solutions to the wellness of an individual’s health. Its primary purpose is to make the world healthier and happier. Approximately, Herbalife has employed 8400 people worldwide. It mostly trades its shares on the New York Stock Exchange with net sales of approximately $4.4billion in 2018.
Herbalife reported a 15% Net Sales Growth in the third quarter and further provide a 2019 growth guidance. In addition, the highlights were as follows: Herbalife reported a net sales of $ 1.2 billion which presented an increment of 15% in comparison to the year 2017 third quarter, there was also an update of volume input point and the guidance of the net sales that ranged from 8.6% – 9.6% and 9.9% – 10.9% growth respectively. Guidance to adjusted EPS was seen to have ranged from $1.99 -$2.09 and $2.74 – $2.84 sequentially. The projected 2019 net sales vary between 2.8% – 6.8% growth which is inclusive of 220bps currency headwind. Further, there is also a five year $ 1.5 billion share repurchase program. There is also a repurchase program of $ 1.5 billion shares.
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Most companies just like Herbalife, prefer to use word of mouth as the primary tool to build and maintain a reputation for effectiveness and reliability of required goods in the short-run or long-run. Using the direct sales model has its own merits. These include: It enhances brand name recognition- in the case of Herbalife, it has been there for around forty years and consistently in the top ten direct selling companies. The distributors of Herbalife have a high saturation of brand recognition such that if they want to make sales, the client on the other end already knows details about the brand thus making the transaction easier to take place.
With such a scenario, it is a given guarantee that having continuously saturated and proper brand name, will, in turn, increase the net sales growth of the year. It also enhances flexibility on the distributors regarding when and where they work. The working hours are up to the individual since it fits most schedules and lifestyles. Independent distributors will, therefore, have a choice of what time suits them best to work. Considering the more you work, the higher the sales and the higher the income, distributors then tend to use the time they all have in marketing and selling Herbalife products. In the long run, an increase in products sales will lead to a rise in the net growth sales of purchased products.