Weight Watchers shares cratered 25 percent Tuesday after the company posted disappointing fourth-quarter results and gave a weak outlook for 2019 as the company tries to pivot to a wellness company from a diet brand.
Here’s what the company reported compared with what Wall Street was expecting, based on a survey of analysts by Refinitiv:
- Earnings per share: 46 cents, adjusted, vs. 60 cents expected
- Revenue: $330 million vs. $347 million expected
Let our news meet your inbox. The news and stories that matters, delivered weekday mornings.
Weight Watchers reported adjusted fourth-quarter earnings of 46 cents per share, falling well short of the 60 cents per share analysts polled by Refinitiv had expected. Sales reached $330 million, also coming in below the $347 million Wall Street had expected.
For 2019, Weight Watchers said it expects to generate about $1.4 billion in revenue. Analysts polled by Refinitiv had been predicting $1.66 billion in sales for the year.
“While we are proud of our accomplishments in 2018, we had a soft start to 2019 versus last year’s strong performance with the launch of WW Freestyle,” CEO Mindy Grossman said in a statement. “Given our Winter Campaign did not recruit as expected, we have been focused on improving member recruitment trends. We quickly moved to course correct, including introducing new creative with a stronger call-to-action and further optimizing our media mix.”
The shares initially plunged by more than 30 percent in after-hours trading before recovering some of that lost ground. They were down more than 58 percent over the last 12 months before Tuesday’s news.
Under Grossman, the company has moved away from its roots as a diet company, dropping the word “weight” from its name and rebranding itself as WW last year. Younger consumers have largely shunned counting calories, instead trying to simply eat clean or be more mindful about what they’re eating.
Executives thought that in becoming a wellness partner rather than a diet brand, they could also keep customers for life instead of losing them after meeting their weight loss goals.
“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,” Grossman said.
Weight Watchers said it will tap spokeswoman, investor and board member Oprah Winfrey, to play a central role in the company’s spring television and digital marketing campaign.