Venezuela currency woes hit Herbalife and other US consumer brands
The actions of the Venezuelan government are undermining earnings for foreign companies and the positions of US investors.聽
The latest example came Monday evening when the nutritional-supplements maker Herbalife reported that first-quarter profit fell 37 percent due to a foreign-exchange loss tied to the devaluation of Venezuela鈥檚 bol铆var. The loss was a hit to Herbalife鈥檚 17 percent owner Carl Icahn, the activist investor who has in recent months taken to defending Herbalife from accusations that it鈥檚 a pyramid scheme.
Herbalife鈥檚 first quarter earnings, however, suggest that Mr. Icahn might have been wise to watch Venezuela more closely.
鈥淚 don鈥檛 think US Investors are exactly itching to get involved,鈥� says our correspondent in Caracas. 鈥淲hat I鈥檓 taking away from all this is that US companies that are still here are in it for the long run. They鈥檙e willing to incur these losses as they weather out the storm that is 鈥�21st Century Socialism鈥� as they likely posses a huge market share.鈥�
Herbalife, which competes with Weight Watchers International, Nutrisystem, and Medifast, has benefited from a focus on emerging markets such as Venezuela and its well-known 鈥淢iss鈥� culture, says our correspondent in Caracas, referring to beauty pageants, such as Miss Venezuela and Miss Universe.
鈥淗erbalife is very popular down here,鈥� our correspondent says.
But Venezuela鈥檚 convoluted currency exchange system has hurt foreign companies, which was forewarned last year by US hedge fund Pershing Square Capital Management LP鈥檚 William Ackman.... For the rest of the story, continue reading at our new business publication聽.
