Why Herbalife's Forex Killed Earnings

The transcript discusses Herbalife's financial struggles, primarily due to a change in the valuation of the Venezuelan Bolivar. The company had been using an unrealistic exchange rate, which inflated their business value. This adjustment has led to a significant decline in their reported earnings. Additionally, the business is facing challenges in Central and North America, with a notable drop in sales. The transcript highlights the broader implications of these financial issues on Herbalife's overall business performance.

What was the main issue with Herbalife's valuation of the Venezuelan Bolivar?

• They used an inflated exchange rate.

• They used a realistic exchange rate.

• They used a lower exchange rate than the market.

• They ignored the exchange rate completely.

How did the adjustment to a more realistic exchange rate affect Herbalife's reported business value?

• It reduced the reported business value to one-fifth.

• It had no effect on the reported business value.

• It increased the reported business value by 50%.

• It doubled the reported business value.

What was the impact of the exchange rate adjustment on Herbalife's Central American market?

• The market showed significant growth.

• The market remained stable.

• The market declined in consecutive quarters.

• The market experienced a temporary setback.

What unusual business practice was mentioned in relation to Herbalife's operations in Hispanic American communities?

• Online-only business model.

• Public seminars with large advertisements.

• Secret places for weight loss education without signage.

• Franchise agreements similar to McDonald's.

What is the overall trend in Herbalife's business performance in the U.S.?

• Significant growth in recent quarters.

• Slight improvement over the last year.

• Stable performance with no change.

• Dramatic decline in consecutive quarters.