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Herbalife (HLF) Continues to Expand Facility; Create Jobs - Analyst Blog

Zacks Equity Research
Updated

Herbalife Ltd HLF is a global nutrition company that sells weight-management, nutrition and personal care products in more than 90 countries to and through a network of around 404 people. With an aim to expand its employee base, the company has recently announced plans to create 300 new jobs by the end of 2018 at its Innovation and Manufacturing facility in Winston-Salem, NC. These new jobs will be in addition to the 500 jobs that Herbalife expects to create by the end of 2015.

The expansion plan also includes additional investment of $3.5 million in infrastructure and development by the end of 2016.

The huge investment in Herbalife’s largest manufacturing facility in Winston-Salem is expected to expand its operations.

Herbalife has been in the spotlight for quite some time amid accusations by Bill Ackman that the company was running a pyramid scheme business model. Per this model, the company boosts business through deceptive marketing practices. The company has also been accused of making money by recruiting sales personnel and not from sales. (Read: Herbalife Faces Another Ackman Attack).

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In Dec 2012, Ackman revealed a $1 billion short position in Herbalife’s shares and accused it of employing such means to further its business. Herbalife, on its part, has been denying the charges since 2012 and has full confidence in its business model. However, Ackman's back-to-back allegations have prompted investigations by the Securities and Exchange Commission, the Federal Trade Commission, the Federal Bureau of Investigation (FBI) and at least two state attorneys general.

But the company seems to have some streak of good luck lately as U.S. District Judge Dale Fischer in Los Angeles dismissed the lawsuit case in March citing insufficient proof. Earlier, federal prosecutors and the FBI also started questioning affiliates of Ackman, and requested documents from people who were reportedly hired by him to campaign against Herbalife.

Herbalife has a Zacks Rank #3 (Hold). Herbalife is not the only company, which employs sales representatives to sell its products. Other multi-level marketing companies like Nu Skin Enterprises Inc. NUS, USANA Health Sciences Inc. USNA and Avon Products Inc. AVP also follow the same model.

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AVON PRODS INC (AVP): Free Stock Analysis Report
 
NU SKIN ENTERP (NUS): Free Stock Analysis Report
 
HERBALIFE LTD (HLF): Free Stock Analysis Report
 
USANA HLTH SCI (USNA): Free Stock Analysis Report
 
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