Accusations And Controversies Surround Herbalife Ltd (NYSE:HLF)
The global nutrition company, Herbalife Ltd (NYSE:HLF)’s business practices have come under a great deal of flak from numerous quarters. It has also been dragged into court and its marketing strategies have also faced a lot of criticism from the public. The company said that it is all set to open a new 6-storey distribution-center in Phom Nem.
Cambodia has a population of almost 15.2M and the opening of this building just indicates that the company wants to expand in the country in a big way. From a regional perspective, this is the 15th country in which Herbalife Ltd (NYSE:HLF) is operating. It has operations in Vietnam and Thailand as well.
A known brand
The company’s brand is known in many countries in the world and it is a provider of personal care products. The company operates a very successful business and its operations are supported by thousands of distributors that sell its health-supplements and vitamin products. However, reports from the media show that rights groups, e-distributors and hedge-fund biggies have recently challenged Herbalife Ltd (NYSE:HLF)’s business model.
They have tagged it as an unprofitable proposition for those who are at the bottom of the pyramid structure that the company works on. These groups have also stated that the company’s business model takes advantage of the vulnerability of certain segments of society and targets them with dreams of quick money and gains.
The accusations continue
These accusations have been constantly denied by Herbalife Ltd (NYSE:HLF) and if truth be told, it has not bruised its earnings in any manner. This week, the company posted a very strong Q3 profit. It announced a net income of $143n which was up 27%.
The company has been embroiled in several legal disputed regarding its operations. On 11 October, a judge in California denied the company’s request to dismiss the lawsuit that a former distributor had filed against it. The distributor had alleged that the company was nothing but a “pyramid scheme”.