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Herbalife Stock Drops After Lowering Guidance as Sellers Stay Home

Herbalife says lower seller activity amid a resurgence in COVID-19 is forcing it to lower its third-quarter and full-year guidance.
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Herbalife  (HLF)  shares slumped lower Tuesday after the nutritional supplement maker cut its revenue guidance due to low distributor activity amid the ongoing COVID pandemic. 

Herbalife now expects net sales to decline between 6.5% and 3.5%, a midpoint that is 700 basis points lower than previously expected. For the full year, Herbalife now expects earnings between $4.55 per share and $4.95 per share, decreasing the midpoint by 15 cents per share. 

"Uncertainty in global markets, fueled by the extended period of the pandemic, has brought about unique challenges in predicting behavior in the channel," said CEO John Agwunobi.

Herbalife shares were marked 9.1% lower in pre-market trading Tuesday to indicate an opening bell price of $49.30 each. 

The company says that it has observed lower-than-expected levels of activity amongst its independent distributors, leading to decreased expectations for the rest of the year. 

The Los Angeles-based company revised its third-quarter and full-year guidance Monday afternoon, ahead of its virtual investor day on Tuesday. 

Despite the COVID-19 Delta variant headwinds, the company says its still remains on track for a second consecutive "record-year" with net sales growth between 4.5% and 8.5%, which still reflects a reduced midpoint of 400 basis points compared to previous full-year guidance. 

The company also reduced its adjusted full-year EBITDA target to between $860 million and $910 million from prior expectations of between $875 million and $935 million. 

Herbalife notes that it has delivered year-over-year growth for eight consecutive quarters and double digit net sales growth for four consecutive quarters.