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Herbalife Nutrition Announces That in the Month of May 90% of Sales in the United States Were Documented Purchases by Consumers, Far in Excess of the 80% Threshold Called for in its Agreement With the U.S. Federal Trade CommissionPremier global nutrition company, Herbalife (NYSE:HLF), today announced that due to the dedication and diligence of its distributors, in May, 90 percent of United States sales were documented purchases by consumers, comprised of more than three million receipted retail transactions. These results far exceed the 80 percent threshold called for in the Company's agreement with the U.S. Federal Trade Commission. The Company also announced that approximately 400,000 customers have converted or signed up as preferred members in the U.S. since the program began in October 2016. "These figures should put an end to any questions regarding demand for our nutrition products and the strength of our go-to-market business model," said Richard P. Goudis, CEO, Herbalife Nutrition. In the past ten months, Herbalife Nutrition created industry-leading technology and tools in partnership with its distributors to help them efficiently document retail sales. The flexibility of the tools, built on a robust scalable infrastructure, has allowed the Company to track retail sales of products to end-users thereby allowing the Company to collect new marketing data, such as pricing, buying preferences and consumer purchase trends. This critical information, most of which is new to the Company, will help create significant competitive advantages as Herbalife Nutrition leverages data analytics to provide enhanced, industry-leading personalized support to its distributors and customers. While the 80 percent threshold is an annual test, the Company believes this one-time off-cycle announcement is important to share with distributors in order to recognize their significant role in achieving this May 2017 milestone. The Company notes, however, these results are based on the Company's records and are subject to the review of the independent compliance auditor. Guidance Update The Company's distributors have successfully utilized the full array of new tools and processes necessary to document retail sales transactions. Yet, as is typical with any change, the new technology and processes have taken time for distributors to learn, then teach and implement in their organizations. This acute focus on learning has impacted current period sales as distributors adapted to these new protocols. The Company expects as these new processes become even more efficient and more routine, the current sales trend will be a short-lived cycle followed by a sequential acceleration of growth. The Company further believes that this situation is similar to what the Company has experienced in markets when changes of this magnitude have been introduced. In fact, other protocol changes made by the Company in 2014 and 2015 had a similar short-term sales impact but then contributed to record performance in 2016. As a result of current sales trends during the transition in the US, combined with softer trends in Mexico, the Company is updating its volume, net sales and EPS guidance for the second quarter and the full year 2017. The updated guidance reflects an increase in diluted EPS and adjusted diluted EPS but a decrease in volume and net sales. Finally, the Company believes that the second quarter of 2017 will be the most challenging quarter of the year from a comparative perspective given that last year's second quarter volume was the largest in the Company's history. The updated guidance is reflected in the following chart:
About Herbalife Herbalife Nutrition is a global nutrition company whose purpose is to make the world healthier and happier. The Company has been on a mission for nutrition - changing people's lives with great nutrition products & programs - since 1980. Together with our Herbalife Nutrition independent distributors, we are committed to providing solutions to the worldwide problems of poor nutrition and obesity, an aging population, sky-rocketing public healthcare costs and a rise in entrepreneurs of all ages. We offer high-quality, science-backed products, most of which are produced in Company-operated facilities, one-on-one coaching with an Herbalife Nutrition independent distributor, and a supportive community approach that inspires customers to embrace a healthier, more active lifestyle. Our targeted nutrition, weight-management, energy and fitness and personal care products are available exclusively to and through dedicated Herbalife Nutrition distributors in more than 90 countries. Through its corporate social responsibility efforts, Herbalife Nutrition supports the Herbalife Family Foundation (HFF) and its Casa Herbalife programs to help bring good nutrition to children in need. The Company is also proud to sponsor more than 190 world-class athletes, teams and events around the globe, including Cristiano Ronaldo, the LA Galaxy, and numerous Olympic teams. The company has over 8,000 employees worldwide, and its shares are traded on the New York Stock Exchange (NYSE:HLF) with net sales of approximately $4.5 billion in 2016. To learn more, visit Herbalife.com or IAmHerbalife.com. The company also encourages investors to visit its investor relations website at ir.herbalife.com as financial and other information is updated and new information is posted. Forward-Looking Statements This release contains "forward-looking statements" within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Although we believe that the expectations reflected in any of our forward-looking statements are reasonable, actual results could differ materially from those projected or assumed in any of our forward-looking statements. Our future financial condition and results of operations, as well as any forward-looking statements, are subject to change and to inherent risks and uncertainties, such as those disclosed or incorporated by reference in our filings with the Securities and Exchange Commission. Important factors that could cause our actual results, performance and achievements, or industry results to differ materially from estimates or projections contained in our forward-looking statements include, among others, the following:
We do not undertake any obligation to update or release any revisions to any forward-looking statement or to report any events or circumstances after the date hereof or to reflect the occurrence of unanticipated events, except as required by law.
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