November 20, 2024
Herbalife’s sales of weight management products in North America continue to decline, most likely due to strong competition from the GLP-1 weight loss drugs. Total U.S. sales for the 9 months ended Sept. 30, 2024 were down 7.9%, and North American sales represented 21% of the total.
Total weight management sales from all regions of the world amounted to $2.105 billion for the first 9 months of 2023, down 3.1%. Total weight management sales for all regions are estimated at $2.8 billion for 2024. If we apply the share of sales for North America (21%) to that figure of $2.1 billion, then estimated North American sales of weight management products comes to $442 million (9 months).
Extrapolating that to the full year, Herbalife is expected to generate North American weight management sales of $589 million. This is compared with an estimated $608 million in 2023.
Herbalife management said that: “Sales volumes continued to decline for the three and nine months ended September 30, 2024 compared to the 2023 prior year periods. Despite increases in new distributors, we continue to have fewer total number of new members in the region during the three and nine months ended September 30, 2024 compared to the prior year periods. We are supporting members with new product launches, a new training and recognition program, targeted communications and sales incentives, as well as modernizing our technological tools in order to enhance our members’ ability to market and sell our products and promote business opportunities. The region implemented 3.0% price increases during March 2024.”
In addition, during the first quarter of 2024, the company initiated a Restructuring Program designed to bring leadership closer to its markets, streamline the employee structure and accelerate productivity. Substantially all actions related to the program were completed as of June 30, with the remainder to be completed by the end of 2024.
During the conference call, management said that the company will be rebuilding and focusing on supporting its distributors better. Within the next year, they will be certifying trainers for their diabetes prevention program. Management also pointed out that their distributors don’t just sell products, they also provide personal coaching, body composition analysis, and nutrition advice and meal planning, services that increase the value of the customer purchase.
DietBusinessWatch/Marketdata Commentary
The recent decline in Herbalife’s weight management sales is simple to explain. Less distributors equals less sales. Similar to the other major MLM company selling weight loss products, Medifast (Optavia line), the company has seen a defection of distributors who have been making less income due to the competition for GLP-1 drugs. Herbalife claims to have reversed this 3-year attrition trend and is now seeing growth in the number of distributors. But, it will take time. Given the fact that GLP-1 drugs (existing ones and new and improved ones to enter the market in the next few years), this will be a long-term challenge to retuyrn to growth