Equity Research Company Praises “The Eric Worre Factor” For Herbalife

Analysts from D.A. Davidson an Equity Research Company published a long in depth report and we are publishing the highlights:

We (the analysts) attended the North American convention of Herbalife on July 20th. MLM training guru Eric Worre gave two talks — it was the best and most practical information we have seen at an MLM convention.

Worre has a consultancy agreement with Herbalife (HLF), his first-ever at the corporate level, and his compensation is based partly on getting HLF to double-digit growth. HLF announced Success Builder, a comp system tweak to drive reps to the 42% payout level.

The Eric Worre factor seems like a game-changer for the company. Training guru for the
MLM industry, Eric Worre, spent nearly 2 hours total giving 2 separate talks: “Why Herbalife?” and “7 Skill Sets.”

Several individual senior level distributor leaders had hired him personally as a training coach, so the corporate leadership decided to engage him to give access to the HLF distributors worldwide. He said he had never agreed to a corporate-wide relationship, but what convinced him with HLF was the high degree of alignment among the corporate senior management, shareholders, and distributors in the field.

Worre sincerely believes being a W-2 employee is the riskiest place to be today. His first talk, “Why Herbalife?” outlined 7 reasons why the company offers an outstanding business opportunity for people who are willing, coachable, and hungry. Sales leaders can use these criteria when recruiting distributors, and we think they’re informative for investors as well:

1. products (there’s a consumer need for them, they meet the need, they’re of high quality, they’re priced to sell, they’re priced for profit);
2. Company culture, gives back, wins awards, number of distributors, publicly traded;
3. Business model (how the products are sold, i.e., physical nutrition clubs, fit camps, weight loss marathons, social media);
4. Compensation plan (reasonable start-up costs, possibility to make some money quickly, reasonable effort/reward ratio, opportunity for a few to make a lot of money;
5. Corporate support (products, training);
6. Timing; and
7. Vision

Worre advised distributors to grow a thicker skin to repel criticisms of MLMs or HLF specifically. He also said it’s time to stop blaming, whining, complaining, and making excuses, and declared that “it’s time for everyone to move faster.”

HLF announced an important tweak to the compensation system, designed to get sales reps more quickly to the 42% commission
level. The previous lowest distributor levels in the organization were:

1. Distributor (buys at a 25% discount to retail selling price);
2. Senior Consultant (250 volume points required, buys at a 35% discount): and
3. Supervisor (2,000 volume points over 1-2 months, 4,000 over 12 months, buys at 50% discount).

The change introduces the Success Builder level in between previous levels 2 and 3. Success Builder distributors get a 42% discount if they hit 1,000 volume points in 1-3 months. HLF corporate is not paying out a bigger sales commission bucket; rather, the Success Builder commissions come out of the comp structure of up-line sales leaders.

Eric Worre outlined why the introduction of Success Builder is so important for the organization. The reasons are that it:

1. Creates velocity and momentum in the business;
2. Feels more reachable to new distributors;
3. Increases the number of successful “examples” that can be illustrated to others; and
4. Simplifies what you need to explain as goals for new distributors.

Worre suggested that each sales leader go home and take a deep audit of their team, and reach out to non-performers and give them another chance for success.

In March 2024, HLF introduced the recognition category of Premier League. Members get special perks like merch. A new distributor who recruits 10 distributors, with 2 of them becoming Supervisors, qualifies for Premier League, which has prestige within the organization.

HLF disclosed that Premier League members globally totaled:

• 10 in March 2024
• 121 in April
• 305 in May
• 674 in June.

HLF had ~806,000 active non-Sales Leader distributors at the end of the first Quarter of 2024, so the addition of new distributors through Premier League alone would add 6,740 or ~1% (not net of distributor attrition).

About Herbalife Ltd.

Herbalife (NYSE: HLF) is a premier health and wellness company and community that has been changing people’s lives with great nutrition products and a business opportunity for its independent distributors since 1980.

The Company offers science-backed products to consumers in more than ninety markets through entrepreneurial Distributors who provide one-on-one coaching and a supportive community that inspires their customers to embrace a healthier, more active lifestyle in order to live their best life.