One Multi Level Marketer Is On A Tear: Herbalife Ltd. (HLF)

The unfavorable product mix for both Nu Skin and Avon should put pressure on the companies going forward. Also, weak discretionary spending will pressure the stocks. Avon’s management has outlined unexciting growth expectations for the company, with revenue expected to come in at mid-single digit growth, and a low double-digit operating margin over the next three years. The company also cut its quarterly dividend by $0.06 per share to $0.23 per share, dropping its dividend payment and lowering its yield from over 4% to a mere 1.15%.

Avon has been seeing pressures from various products and product lines, where competition is fierce in the niche beauty products market. Pressures include those from Estee Lauder Companies Inc (NYSE:EL) and Revlon Inc (NYSE:REV), whose products are sold through direct-sales companies, as well as internet and mass-market retail channels. Both of these companies have posted better than expected earnings results. Estee Lauder posted last quarter earnings of $1.16 per share, which were up 15% from the prior-year quarter, and ahead of the management guidance range of $0.97-$1.03. Estee also owns brands that includes MAC, Bobbi Brown and Clinique.

Revlon’s last quarter earnings were up 28% from the same quarter last year. Revlon’s brands includes Almay, Pure Ice, Charlie and Mitchum. Driving Revlon has been sales growth of 14% for the U.S. segment and 15% for Latin America. Revlon is up over 40% year to date already, whereas Avon is up almost 30% over the same time period.

One Multi Level Marketer Is On A Tear: Herbalife Ltd. (HLF)

Published on February 22, 2013 at 12:03 pm by The Motley Fool in News

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