Herbalife (NYSE:HLF) reported a 6.3 percent drop in third-quarter net income during its latest earnings announcement. Herbalife’s net income fell to $87.7 million, or $1.01 per share, in the third quarter, from $93.6 million, or $1.09 per share, a year earlier. Revenue rose 1.7 percent to $1.12 billion. On an adjusted basis, the company’s earnings were $1.21 per share. Analysts expected earnings of $1.09 per share on average, according to Thomson Reuters I/B/E/S.
Herbalife Chief Executive Michael Johnson has announced that he will step down June 1 of next year, after a tumultuous 13-year tenure. Johnson joined the company from Disney in 2003. He will be replaced by Chief Operating Officer Richard Goudis, who took over as COO in 2010 after a five-year role as chief financial officer. Johnson will remain with the company in the role of executive chairman.
In an interview, Johnson said the transition had long been in the making. He said, “It was the right time. This gives me an opportunity, as executive chairman, to look at the larger picture.” Goudis said in a statement that he is prepared for his new role. “Michael and I have been working together for 12½ years,” he said. “A lot of the strategies that are in place today, I’ve been right alongside Michael in putting them in place.”
Over the years, Johnson has publicly battled with activist investor William Ackman in a bitter fight that enveloped the company. In 2014, the U.S. Federal Trade Commission opened a probe into the company following Ackman’s allegations that Herbalife was running a pyramid scheme. The accusations claimed that Herbalife’s sales practices, which relies on independent resellers who are rewarded for pulling in new members, amounted to “the best-managed pyramid scheme in the history of the world.”
Ackman and billionaire investor Carl Icahn have opposing bets on Herbalife. Icahn disclosed a 20.78 percent stake in the company in August. Icahn famously called Ackman a “liar” and a “crybaby” in a CNBC interview in 2013. Other well-known Wall Street figures, including Daniel S. Loeb and George Soros, also jumped into the unusually public fight.
In July, the company agreed to change the way it does business and pay $200 million to settle the allegations. The FTC settlement appeared to have little effect on Herbalife’s business. The settlement did not include any move to shut the company or any other action that would lead to a plunge in its stock price.