The multi-level marketing supplement company badly missed earnings estimates for its fourth quarter.
Shares of Herbalife (HLF 1.78%) plummeted 31.7% on Thursday after the dietary supplement specialist badly missed earnings expectations with its latest quarter.
Herbalife serves up a steep earnings miss
Herbalife's fourth-quarter 2023 net sales grew 2.5% year over year (2.9% at constant currency) to $1.215 billion, while its adjusted (non-GAAP) earnings declined 47.2% over the same period to $0.28 per share. Analysts, on average, were expecting significantly higher earnings of $0.39 per share on revenue of $1.19 billion.
Herbalife is in the middle of a "transformation program" aimed at optimizing the company's cost structure and business processes while bolstering revenue growth. Management indicated it delivered roughly $70 million of cost savings through the program in 2023, and now expects to deliver total program run-rate savings of at least $115 million in 2024.
The company also paid down $155 million in debt from its senior credit facility and 2024 convertible notes, including $126 million of early repayments.
And though Q4 revenue was up slightly from the year-ago period, yearly revenue was down 2.7% versus 2022. The company reported cash at the end of December 2023 of $575 million.
What's next for Herbalife stock?
Even so, Herbalife opted not to provide quarterly guidance. And during the subsequent conference call, management indicated it expects revenue in 2024 to be relatively flat from 2023. Most analysts were modeling modest revenue growth of around 1.4% for the coming year.
After coupling Herbalife's big earnings shortfall with that underwhelming forward revenue outlook, it's hard to blame Herbalife investors for taking their hard-earned money and putting it to work elsewhere in any number of other promising stocks.
Steve Symington has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
