Herbalife Overstated Member Growth, Blaming Database Glitches

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Herbalife, the Los Angeles producer and seller of supplements and weight-loss products said that it overstated its worldwide member growth for 2015.

The Wall Street Journal reported Thursday that over several months, Herbalife misstated a measure of its business that it created to defend itself against activist investor William Ackman’s accusations that it is a Ponzi scheme. The company is still under federal investigation as part of that allegation.

The company blamed “database scripting errors” for its misreporting the number of active new members, a metric that it first mentioned on a call with analysts and investors in August. It gave incorrect figures 28 times over three earnings calls. Herbalife said the error wouldn’t change its audited financial results.

Herbalife’s corrected figures for 2015 now say active new members worldwide grew 3.4 percent instead of 8.3 percent. Its revised figures for the fourth-quarter cut worldwide growth to 3.2 percent from 16.7 percent.

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