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Weight Watchers Tumbles After Quarterly Sales Miss Estimates

By Steve Wynne-Jones
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Weight Watchers Tumbles After Quarterly Sales Miss Estimates

Weight Watchers International Inc. tumbled the most in five months after second-quarter sales missed analysts’ estimates, renewing concerns about the company’s comeback effort.

Revenue amounted to $309.8 million last quarter, unchanged from a year earlier, the New York-based company said in a statement Thursday. Analysts had projected $318.5 million on average, based on two estimates compiled by Bloomberg. Earnings of 46 cents matched the average estimate.

Weight Watchers, which enlisted Oprah Winfrey last year to help turn around the business, is still struggling to pull out of its slump. But the company cited a 9 percent year-over-year gain in North American subscribers as a sign that its comeback is taking hold.

“I think there’s evidence we’re making progress,” Chief Executive Officer Jim Chambers said in an interview. “To me, that’s the strongest message.”

Weight Watchers fell as much as 14 percent to $9.85 in New York, the biggest intraday drop since Feb. 26. Even before the plunge, the stock was down 50 percent this year.

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Weight Watchers was hit hard by the rise of fitness apps and other weight-loss technologies, contributing to three years of declining sales. The company has billions in debt, and its stock is heavily shorted by investors. Chambers, who took over in 2013, has worked to turn around the company by rejiggering its nutrition program and adding a social-networking component to its app. The idea was to adapt to a shift among dieters toward healthy eating, rather than calorie counting.

Weight Watchers has seen a surge in publicity since October, when Winfrey agreed to buy a stake in the company and help advertise the business. Since then, she’s tweeted about her weight loss and released a video that featured a surprise appearance at a Weight Watchers member meeting in New York. This was the second straight quarter of subscriber gains for the company after four years of declines. Winfrey will feature prominently in Weight Watchers’ marketing this winter season, when potential customers start dieting because of New Year’s resolutions, Chambers said.

“Oprah is active, engaged and very much continues to be a positive,” Chambers said. “We’re excited about where we’re going in the relationship we have.”

News by Bloomberg, edited by ESM. To subscribe to ESM: The European Supermarket Magazine, click here.

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