Business

Feeling pumped: Herbalife ups forecast after strong Q1

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Embattled Herbalife posted a 25 percent gain in first-quarter profits, topping Wall Street expectations.

The distributor of nutritional and weight-loss products, at the center of a huge smackdown between hedge fund heavyweights Bill Ackman and Carl Icahn, also raised its 2013 earnings forecast to as much as $4.80 a share — up from $4.65.

Net profits in the period were $118.9 million, or $1.10 a share, topping the $1.06 analysts had expected. Revenue in the quarter grew 17 percent to $1.1 billion.

“We continue to deliver record results in sales and profitability as our independent distributors successfully execute numerous growth strategies that enable deeper market penetration, developing customers using our weight management and targeted nutrition products every day,” CEO Michael Johnson said in statement.

The solid growth comes as the Los Angeles-based company faces battles on several fronts. Last December, Ackman accused Herbalife of being a pyramid scheme and placed a $1 billion short bet on the company, believing it would be shut down by regulators.

Icahn, no friend of Ackman, then took a nearly 16 percent stake in Herbalife.

Herbalife also appears to have stopped buying back shares, reporting the same number of shares repurchased at the end of the first quarter — 4 million — as when it last reported earnings, on Feb. 19.

Herbalife’s biggest growth in the quarter came in South and Central America.

D.A. Davidson analyst Tim Ramey, in a report, expressed “concern” that North American sales rose by only 4 percent, saying the “loss of lead generation had an impact.”

The company recently banned distributors from profiting by selling sales leads to new recruits.

Herbalife shares closed at $38.75, up 1.3 percent, and are up 17.6 percent year-to-date.