Written by Michelle Jones

Herbalife (HLF) released its third quarter earnings report after closing bell tonight, posting adjusted earnings of $1.28 per share on revenue of $1.1 billion. Analysts had been expecting earnings of $1.05 per share and $1.15 billion in revenue. Management had guided for earnings of $1 to $1.10 per share for the quarter.

Currencies weigh on Herbalife’s net sales

Reported earnings were $1.09 per share. Net sales increased 5% in constant currency but declined 12% on a reported basis. Currency headwinds have weighed heavily on Herbalife and pretty much every other U.S.-based company that does business outside the U.S.

Herbalife reported a 3% decline in volume points year over year, marking declines in all regions except Europe, the Middle East, and Africa. However, the company saw solid growth in active sales leaders in most of its markets, including a 31% increase in China.

New active members in North America increased 34%, while globally, excluding China, the number of new active members increased 21%.

Herbalife posts solid China results

One of the big concerns for Herbalife has been China as it has been a large market for the company and it has faced an investigation there, but China sales increased 24% year over year on a reported basis and 27% in constant currency. Competitor Nu Skin posted disappointing results, blaming China for much of its problems as it took a write-down for inventory there. Nu Skin had warned earlier this month that demand in Greater China was soft as well.

In other some regions, however, Herbalife didn’t perform quite as well. In constant currencies, North America sales fell 1%, while the Asia Pacific region, excluding China, fell 16%. Mexico sales declined 1%, although South and Central America sales increased 19%. Sales in Europe, the Middle East, and Africa increased 13% in constant currency.

Herbalife makes changes to business model

Herbalife has gradually been making changes to its business model as it deals with an ongoing investigation by the Federal Trade Commission and pyramid scheme allegations. Among the changes that have been made was a limit placed on first orders. Analysts have been wondering about the impact this change has had on overall volumes. The limit was implemented in 18 countries as of the end of last year’s third quarter and in the rest of the countries in February.

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