Herbalife says it’s in talks with FTC
Embattled Herbalife Ltd. said Thursday that it was in discussions with federal regulators about a possible resolution of an investigation into its business practices.
“No assurances can be given that the outcome of these matters will not have a material adverse impact on the company’s business operations, its financial condition or its results of operations,” the company said in its annual report, which it filed late Thursday afternoon.
The Federal Trade Commission opened an investigation of Herbalife, the Los Angeles maker of nutritional supplements, in March 2014.
By that time, the company had spent more than a year locked in a legal battle with billionaire investor Bill Ackman, who has accused the company of operating a pyramid scheme. The company contests Ackman’s claims.
In Thursday’s report, Herbalife executives said they couldn’t predict the timing or the outcome of the talks with the FTC. They said possible outcomes included a financial settlement, closure of the case with no action taken or the agency’s filing of a “contested civil complaint.”
Herbalife sells weight-loss shakes and nutritional products through independent salespeople — which it calls its members — in more than 80 countries.
Members buy Herbalife products in bulk, which they either consume or try to resell. They are paid bonuses based on the sales of new members they recruit.
Ackman said only those salespeople at the top of the company make money, while more than 90% of distributors earn nothing or even lose out.
Herbalife shares rose above $52 in after-hours trading after closing at $45.76, down 45 cents.
Twitter: @melodypetersen
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