Shares of Weight Watchers jumped as much as 15 percent this week, after the company posted a loss that was smaller than what analysts had expected.
Indeed, the company reported only an adjusted loss of $0.16 per share, which is easily much better than the $0.26 loss that Bloomberg analysts had expected. And while revenue did not quite live up to expectations either, the $363 million they posted was only 1 percent less the $366 that was expected.
On that note, then, Weight Watchers raised earnings-per-share guidance for 2019 to sit within the range of $1.35 and $1.55. The company had originally forecast 2019 EPS would be within the range of $1.25 to $1.50.
Weight Watchers CEO Mindy Grossman comments, “While we are disappointed with our start to 2019, we are confident that our strategy to focus on providing holistic wellness solutions leveraging our best-in-class weight management program is the right path to support long-term sustainable growth.”
And with that, you should realize that Weight Watchers is trying to transform itself to be seen as a new wellness brand instead of just a dieting company. As a matter of fact, the company revamped its image last year, rebranding as WW. The company realized an inherent need for a new image and launched a campaign for “WW: Weight Watchers reimagined” and “WW: The New Weight Watchers.” Subscriptions were up 1 percent
Unfortunately, this new look did not receive a warm reception from consumers; and it came at a time when the keto diet started to grow as a successful diet trend. This, overall, hurt the company’s early recruitment efforts this year. Indeed, subscribership at the end of that period were up only 1 percent from the year prior.
Still, nearly three-quarters of all Weight Watchers’ 4.6 million members are “digital-only subscribers.” Part of this comes in the form of Weight Watcher legacy meetings business sliding 10 percent from one year ago. Grossman goes on to that the company is now definitely focused on improving the meeting experience in order to get people to return to the brand.
Where WW is really struggling is branded products, falling 29 percent in the first quarter because of the membership slide. The branded product decline, then, comes as a result of the loss in the things that new members usually buy: measuring cups, food, etc.