Herbalife Stops Calling Customers Distributors

By Bizclik Editor

The July edition of The Business Review USA is now live!

Herbalife, a nutritional products company in Los Angeles has decided to change the name of its customers to ‘members’ instead of ‘distributors.’ After receiving criticism over its business model, Michael O. Johnson, the company’s chief executive offer, announced the change during a conference call with analyst.

The name change comes eight months after Bill Ackman, a hedge fund manager called Herbalife a pyramid scheme seeing as most of its distributors lose money.  In 2012, Ackman’s Pershing Square Capital Management took a $1 billion short position against Herbalife stock.

Issuing another attacked on the nutritional company, Ackman released a list of questions about Herbalife’s second quarter earnings. The hedge fund asked why Herbalife listed the $15 million it spent defending itself against Ackman’s attack as a one-time expense noting that the company has been sued a myriad of times for being a pyramid scheme.

Shares reached a 52-week high Tuesday morning; just one day after Herbalife reported record sales and revenue for the second quarter.

Read related content:

“Herbalife’s business is stronger than it’s ever been and the operating results announced yesterday are the best in the company’s history,” Johnson said.

Herbalife has a very Avon-like quality to its sales process. Products are not sold in stores, instead “members’ have to order through people who sign up as independent distributors. The company did announce that most ‘members’ join the company to receive discounts on Herbalife products and have no intention to actually sell the products themselves.

Shockingly, less than 1 percent of distributors make over $25k per year. Consumer and civil rights groups have urged the Federal Trade Commission to investigate the nutritional company.  

“There’s been a whole lot of misinformation spread about Herbalife. As a result Herbalife has become one of the most researched companies on Wall Street,” Johnson said. Investors have purchased shares because the research has shown it is “a sustainable, robust company,” he said.

Share

Featured Articles

DEI done right: Brook Sims, COO, MAC Diversity Recruiters

Passionate about helping others find their voice, diversity leader and COO Brook Sims talks powerful leadership, diverse teams and being a change agent

Q&A: China’s ecommerce innovator Jeff Li, CEO of Shoplazza

Named in Fortune China’s 40 under 40 for 2022, former Baidu head Jeff Li is the entrepreneurial founder and CEO of ecommerce platform Shoplazza

How hybrid work is revolutionising the physical office

As hybrid work models roll out worldwide, the purpose of the office is changing with collaboration, connection and networking taking centre stage

Trailblazer: Shanique Bonelli-Moore, DEI chief at Clorox

Sustainability

Dean Forbes – the Forterro CEO aiming for the moon

Leadership & Strategy

Why becoming a B Corp is good for business

Sustainability