Herbalife Nutrition reported a decrease of 11% in net sales during the first quarter of 2022, as compared to the prior year’s quarter. Total net sales were $1.3 billion. EPS for the quarter was $0.96 and adjusted earnings per diluted share topped out at the high-end of the company’s guidance range at $0.99. Adjusted EBITDA exceeded guidance, reaching $185.6 million.
Full-year guidance has now been updated to include a lower net sales range of -10% to -4%, with an anticipated return of year-over-year net sales growth in the fourth quarter. Net income during the quarter was $98.2 million.
The company attributes a slowdown in sales to sluggish performance of new distributors. Distributors who joined pre-pandemic, as well as the company’s preferred customer base, continued to order at historical levels. As in-person events and new sales initiatives resume, the company expects to see a return to engagement within this new distributor segment.
“The interactive discussions, the face-to-face team building and the social elements that are characteristic of our in-person events are not only an important source of training, motivation, and inspiration for our distributors, but also strengthen the social fabric that our business thrives on,” said Herbalife Chairman and CEO John Agwunobi.
Meaningful steps to improve margins through pricing and cost controls will also address the dramatic rise in freight and input costs.
“While organic sales growth remains our top priority, we are working on multiple fronts to improve our margin profile that supports our strong operating model, which has delivered powerful cash flow over the years,” said Herbalife CFO Alex Amezquita.