Seeking Alpha

Herbalife (HLF) yesterday disclosed information about how much its distributors earn as part of...

Herbalife (HLF) yesterday disclosed information about how much its distributors earn as part of its attempts to counter continued accusations that, in the words of Bill Ackman, it's just a "well-managed pyramid scheme." Just under 90% of distributors received no payments last year, while the average compensation for those who did ranged from $104 to $724,030, depending on  their levels.
Comments (11)
  • chopchop0
    , contributor
    Comments (3262) | Send Message
     
    90% of people received no payments as distributors last year at HLF?

     

    Sounds kosher to me lol
    7 Feb 2013, 07:45 AM Reply Like
  • Herbascum
    , contributor
    Comments (109) | Send Message
     
    I was in that 90%. Lost over 4K total.
    7 Feb 2013, 02:28 PM Reply Like
  • Deja Vu
    , contributor
    Comments (1223) | Send Message
     
    I note that Herbalife has withdrawn their claims about median compensation that I proved to be mathematically impossible in my article...where be the Herbalife suppporters who so enthusiastically attacked me in the comments section?

     

    http://seekingalpha.co...

     

    I also note that this flatly contradicts Herbalife CEO's statement (now withdrawn by himself!) on CNBC that 90% of the sales were outside the network of distributors.
    7 Feb 2013, 08:49 AM Reply Like
  • GlobalEntrepreneur
    , contributor
    Comments (2) | Send Message
     
    That’s all relative! Payments and earnings can come along in many different forms, depending how one looks at it. I know that many customers who become a distributor, EARN with this simple step at least 25% to 35 % discount from their previous paid 100% RSP! Why pay more for a fantastic product, if you can have it at a discount? My discount is at 50% !!!
    7 Feb 2013, 08:59 AM Reply Like
  • Herbascum
    , contributor
    Comments (109) | Send Message
     
    Not much of any discount when they hit you with packaging fees!
    7 Feb 2013, 02:28 PM Reply Like
  • TheWayItWorks
    , contributor
    Comments (31) | Send Message
     
    This release and these numbers validate that HLF's business model is not a pyramid scheme. First, the numbers validate that a large majority simply join for the discount purchase of product for personal and family use. Second, there is no payment to distributors for recruiting. If you look at the Fortune Hi Tech Marketing model, shut down by FTC and 3 state AGs, a new distributor was charged $299 to join with $100 coming back to the recruiting distributor. Then, the FHTM distributor was forced to buy product annually on a preapproval to ship and charge their credit card. Neither of these tactics are required or condoned by Herbalife. Herb Greenberg of CNBC worked on his 20 minute "hit piece" for over a year and he never found the purported "garage filled with unsold product". There is no incentive for a distributor to buy product that they cannot re-sell or use in a reasonable period of time. Finally, these number indicate that a small majority of distributors, and their teams, are selling an enormous amount of product. This is indicative of most sales teams you find in any major corporation; meaning the top 20% of the sales team produces a majority of the company's revenue.
    7 Feb 2013, 09:29 AM Reply Like
  • pmfish
    , contributor
    Comments (6) | Send Message
     
    All this shows is Ackerman has influence with the news media. I always felt the sales I made was my income and was not from Herbalife. I just bought the product for resale and the customers that wanted to sign up to save 25% on their purchases were also my customers as they mainly came to me for product, not Herbalife. I no longer sell Herbalife, because I moved and did not want to start a new line of customers and Herbalife was also a side income. The company always treated the distributors with respect while I was there.
    7 Feb 2013, 10:01 AM Reply Like
  • Rhianni32
    , contributor
    Comments (2004) | Send Message
     
    90% receive no payment. It may not be a pyramid scheme in the illegal sense but it sure is the pyramid scheme in the "people spending their time trying to build a business that goes nowhere" sense.
    7 Feb 2013, 11:03 AM Reply Like
  • xiphos226
    , contributor
    Comments (2) | Send Message
     
    They should provide a median for those statistics, distribution information is quite relevant in making analysis. The Median's probably $104.

     

    The mere fact they're providing vague and minimal descriptions on their payment distribution hints at cover-ups.

     

    We've seen all too well what happens when the integrity of a company is questioned, they either go all out with nothing to hide, or hide and show as little as possible. They were found guilty in Belgium? Is this not something that worries anyone?
    7 Feb 2013, 02:28 PM Reply Like
  • Edwardj
    , contributor
    Comments (3) | Send Message
     
    The direct selling industry can actually be the savior for many families in America. Where else in this country where you can start a business for under a thousand and earn as much as you want? Ask many franchise owners who invest 6 figures to buy one if they are making a decent return. If your a go getter you will be rewarded in direct sales no matter the product. EjH San Francisco
    7 Feb 2013, 02:30 PM Reply Like
  • Viaticus
    , contributor
    Comments (18) | Send Message
     
    I have a bit of a business background having worked as a bookeeper, tax preparer, programmer and systems analyst for small businesses to a large corporation. I will not claim to have legal expertise in MLM and shall not engage in definitions of pyramid structure or not. However, as an investor doesn't it seem rather odd that you can have 90% of your distributors work without remuneration. All the prior discussions have led me to believe that these distributors are actually a sales force. A sound business depends on its sales people to keep the product cycle active and keep profits coming in the door. But if ninety percent of your sales representatives are seeing no profit, you must have a high turnover rate.

     

    This is why so many investors are jittery with this investment. The fundamentals for this company look excellent. But there is a sense that this is almost too good to be true. Because of the hedge fund debacle that has broken out, between shorter versus long, the technical analysis looks very negative. And this just seems like another red flag telling investors to beware.
    7 Feb 2013, 02:38 PM Reply Like
DJIA (DIA) S&P 500 (SPY)
ETF Tools
Find the right ETFs for your portfolio:
Seeking Alpha's new ETF Hub
ETF Investment Guide:
Table of Contents | One Page Summary
Read about different ETF Asset Classes:
ETF Selector

Next headline on your portfolio:

|