Herbalife Q3 results are about to be released. Here is what to expect:

  • Internet indicators show no signs of a meaningful turnaround in Q3 for Herbalife in North America.
  • Download activity for the Herbalife POS app and other indicators suggest distributor growth to be slightly down in North America relative to Q2.
  • Reduced activity on the Herbalife Membership site and the termination of Preferred Member promotions hint at a sharp drop in new Preferred Members in North America relative to Q2.

Trends suggest a continuation of the weakness experienced in North America during Q2. Volume Points will likely be down 15-25% YoY, roughly in keeping with the decline experienced in Q2.

All Eyes on the US

With Q3 representing the first full quarter where the FTC sanctions are fully in effect, there is a great deal of interest surrounding their effect on sales and membership in the region. North American sales in 2017 Q2 were down 18% compared to Q2 of 2016. Will Q3 see a reversal, continuation or worsening of this trend?

Before we get into the detail, let us first review how well these indicators performed in my first attempt at forecasting VPs and new members in North America at the end of Q2. My estimates were as follows:

  1. VP decline of 12% or more vs. actual decline of 18%.
  2. New Member YoY decline of 30% or more vs. actual decline of 27.4%.

These numbers were worse than the street expected, and the stock declined sharply when trading resumed. In the earnings call, Rich Goudis sought to reassure shareholders that the sharp fall in North America was temporary.

…we are confident in our plans to return to growth and expect sequential improvement in trends later this year.” Rich Goudis – Q2 Earnings Call”


But is it temporary? Let’s take a look at the available clues on the Internet and see what they suggest may be in store for Herbalife’s (NYSE:HLF) Q3 performance in North America.

Original article here: