Lose Weight With Herbalife Ltd. (HLF) Products and Make Money With the Stock

GNC encourages store loyalty with its member rewards program. For $15 a year, a member can get discounts at GNC Holdings Inc (NYSE:GNC) stores every day. Earlier, it was only the first week of the month. The company just expanded it to include every day, and so far, the results have been positive.

GNC is also rapidly growing its e-commerce platform. The company sells its nutritional supplements online at GNC.com and LuckyVitamin.com. Both are witnessing their revenue grow 20% annually.

NutriSystem Inc. (NASDAQ:NTRI) offers 150 different menu items that are based on a low Glycemic Index diet. The company’s Nutrisystem Select offers ready-to-go and frozen foods. Its program is sold via the internet and direct marketing over the telephone as well on QVC.

NutriSystem Inc. (NASDAQ:NTRI) is the smallest of the four. It also having the hardest time competing with the other companies. Even though the company has good products and a prime outlet with QVC, the weight-loss space is extremely competitive.

Company operations

Apart from the company’s headquarters in California, you have research, manufacturing, and distribution. Research is conducted in a facility in Torrance, California, where 1,300 employees work, including 50 chemists. Here, they analyze ingredients and finished products, ensure quality, and research new products.

Manufacturing is done out of a 120,000-square-foot plant in Lake Forest, California. There are two additional plants in China, and the company is building a $130 million plant in North Carolina. Products are distributed from their distribution facility 16 miles south of company headquarters in Los Angeles.

Independent tests

Herbalife hired Los Angeles-based independent research firm Lieberman Research Worldwide to track the use of Herbalife products. The thesis behind Ackman’s argument is that no one is using the product. In October, Lieberman surveyed 2,000 people and found that 100 respondents, or 5%, had purchased a Herbalife Ltd. (NYSE:HLF) product within the past three months. 91 weren’t registered distributors. They had actually bought the product from a distributor.

To further prove the tests were accurate, Bloomberg Businessweek was able to audit the results. According to Bloomberg Businessweek:

Bloomberg asked two independent research firms to evaluate the results. Both said Lieberman was a reputable researcher and concluded the sample size was large enough to generate valid results. Swartz, the SunTrust analyst, says if the survey is to be believed, it pulls the rug out from under most of Ackman’s Herbalife claims.

Foolish assessment

Herbalife Ltd. (NYSE:HLF) has been in business for over 30 years and has had to deal with the death of its founder, management changes, an IPO, an LBO, and an IPO again. Through this time, the company has steadily grown. The market is starting to notice and dismiss Ackman’s short thesis. At the end of the interview with Bloomberg Businessweek, CEO Michael Johnson summed it up best on the outlook for Herbalife:

We’re still going to be here 33 years from today


Mark Yagalla has no position in any stocks mentioned. The Motley Fool has the following options: Long Jan 2014 $50 Calls on Herbalife Ltd. (NYSE:HLF).

The article Lose Weight With Herbalife Products and Make Money With the Stock originally appeared on Fool.com.

Mark is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

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