Herbalife abruptly ousts CEO on heels of disappointing sales
Johnson was tapped to step into the breach the last time the company yanked a CEO, too. In 2019 then CEO Richard Goudis abruptly resigned after an audio recording surfaced that suggested Goudis was advising an employee to circumvent laws governing bribery by officials of US based companies operating in foreign markets, in that case China.
Interim CEO: Company needed a ‘spark’
No precise reason was given for yesterday’s move, which like the earnings report, was announced after market close. Agwunobi, who has a medical degree to go along with other academic credentials and has a lengthy record of public service in the US Public Health Service Commissioned Corps, had been with Herbalife for seven years as of yesterday.
However, in the wake of disappointing earnings report, Johnson said, “We decided to make the change in order to provide a spark.”
As for the earnings report, Herbalife saw sales declined by 9.4% year over year in the third quarter of its fiscal 2022, coming in at $1.3 billion. When figured on a constant currency basis, the decline was 3.5%. The company still made a healthy profit, n
But the volatility of global markets led the company to withdraw its full year 2022 guidance. That, combined with the musical chairs in the management suite, unhinged stock traders, who sent the stock price down below $21 in early trading today. The company’s stock price has decline more than 50% over the past year. The company’s shares hit an all time high of more than $60 in 2019 (the shares underwent a 2-for-1 split in 2018).
Herbalife’s CFO Alexander Amezquita said that macroeconomic conditions have affected the company’s results. Those include the ongoing global pandemic, inflation, teh war in Ukraine and the resulting supply disruptions.
Is the pandemic boom finally over?
But Amezquita said that has now trickled down to consumers in an unpredictable way, which is why the company pulled its guidance for the remainder of the year. Amezquita said it’s unclear if consumers are drawing down their dietary supplements spend now that they pandemic-induced buying craze is subsiding, or if higher costs for other goods means they just don’t have enough left over funds to spend on products they’d otherwise choose to buy.
“What we have seen through the third quarter is a pretty dynamic shift in consumer behavior and purchasing behavior. . . . clearly, there has been a shift through the quarter and our inability to really forecast these shifts just leads to our inability to forecast how Herbalife Nutrition is going to behave in that environment,” he said. Amezquita made his remarks as part of an earnings call with stock analysts that was posted in transcript form on the site seekingalpha.com.