Medifast Inc. reported last week that its chief financial officer Edward Powers plans to step down. Powers is resigning just six weeks after the company’s former CFO Brendan Connors stepped down on November 13, which analysts believe has greatly affected the company’s stocks.
As reported on December 26, Medifast’s stock shares have plummeted 13 percent to its lowest value in two years at just $25.50. The Wall Street Journal reports this makes the stock the worst performer in the Standard & Poor’s Composite 1500 index.
Powers promises to leave the company no later than January 4. According to reports his resignation from Medifast is for a desire to pursue other interests, namely to take a job in the construction-tool industry in the greater Baltimore area. Information on any further reasoning has not yet been released.
Even as we head in to the biggest season for weight loss brands, another diet company affected by recent stock exchange drops is HerbaLife.
Because both Medifast and HerbaLife are in the midst of a stock market downturn, some are placing the two companies in the same sinking financial boat. However, Wedbush Securities analyst Kurt Frederick told the New York Post that Medifast is “set up very differently from Herbalife,” suggesting Medifast’s recent slump is more related to Powers’ resignation and less related to the company’s overall sales approach.
Frederick pointed out that HerbaLife sells its supplements to distributors which then sell them to customers at a higher price. On the other hand, Medifast’s distributors do not hold inventory nor do they practice direct commerce with customers, steering it away from the tiered marketing model.
All is not lost for Medifast, however. Despite its recent CFO shuffle and stock drop the company’s shares are still up 87 percent since the beginning of 2012. This is up from a 50 percent drop in 2011 that caused Medifast to re-evaluate the cost of expansion of its weight-control centers. In addition, the Wall Street Journal reported that the company nailed down some ambitious goals in late 2012, including an aim of $1 billion sales in 2017.
January 1st, 2013