When Dawn Zier became Nutrisystem (NTRI) Inc.’s first female chief executive officer in 42 years, she brought her own dieting angst to the job.
“As a woman who has struggled with weight, I understand the emotional things that come with it -- not being happy with how you look, how you feel,” Zier, 49, said in an interview. “I feel like I brought a personal understanding of the customer and the real ability to listen.”
Nutrisystem sales had been falling for five years and the company had lost touch with its mostly female customers when Zier took charge. She created marketing that urges women to put themselves first, introduced a fitness app called NuMi and began chasing low-income shoppers with a cheaper dieting kit sold at 2,000 Wal-Mart stores.
Zier has returned the company to modest profit and turned in four consecutive quarters of revenue growth. The question is whether she can keep the turnaround on track in an industry facing growing competition from digital upstarts. Nutrisystem’s core plan, which delivers 28 days worth of prepackaged food to customers’ homes, costs as much as $408. With apps like MyFitnessPal and Fooducate, people can track their diet and exercise for free.
While there’s no shortage of potential customers -- almost 75 percent of Americans are overweight or obese -- few diet systems have longtime staying power because consumers are fickle, constantly chasing the next fad.
“In the old days, there wasn’t much in the diet space,” said Mitchell Pinheiro, a senior analyst at Imperial Capital in Los Angeles. Now with all the fitness apps, “people are trying to eat healthier on their own.”
This is Zier’s first CEO job. While she studied electrical engineering at the Massachusetts Institute of Technology, she’s spent much of her career in marketing, previously at Reader’s Digest, where Zier most recently ran the international business.
“I was able to break through the glass ceiling because people gave me the opportunity and saw the talent and passion to win and succeed,” she said. “Luck and having sponsors in an organization that are willing to open doors and help you.”
Her first impression on arriving at Nutrisystem’s Fort Washington, Pennsylvania, headquarters was that the brand had “gotten a little dusty.”
Founded in 1972 as Shape-Up, the company started out selling weight-loss products and counseling at its own stores. In 1999, Nutrisystem went public and began selling meals and dieting programs online. The 28-day program comprises breakfast, lunch, dinner and snacks. Customers are encouraged to add their own fruits and vegetables.
In the wake of the recession, Nutrisystem found itself battling for cash-strapped customers not only with Weight Watchers International Inc. (WTW), a longtime rival, but with free dieting apps, as well. Previous management’s answer was to ratchet up the discounts, hurting profits and eroding the brand.
One of Zier’s top priorities is capturing a greater share of the retail market. She green-lighted a 5-day kit to reach consumers who can’t afford, or commit, to 28 days. The kit -- which also comes in a version for type 2 diabetes sufferers -- includes five days worth of meals, as well as access to free weight-loss counseling. At $44, it’s a more affordable option than the 28-day kit, which ranges from $275 to $408.
“The Wal-Mart customer is very different from our customer,” Zier said. “It brought in a new audience.”
Nutrisystem plans to roll out versions of the 5-day kit at Sam’s Club and Target Corp. in the coming months.
“There are so many competing priorities in the life of typical women -- they are taking care of their family and working, so often they themselves come last,” said Zier, the mother of two teenagers. “My messaging is, ‘You’re worth it.’”
New TV commercials feature celebrity spokeswoman Marie Osmond, 54, holding her grandchild and saying “You can’t take care of your family, until you can take care of yourself.”
Donna Shana, who writes a lifestyle and entertainment blog called Brown Girl Next Door, said the advertising “sucks you in. It gives you this feeling that magic is going to happen, and it kind of doesn’t.”
Shana, who blogs for The Champion newspaper in Atlanta, tried out a 15-week program for free and wrote about it. While she dropped “maybe 15 or 20 pounds,” she put the weight back on, echoing nutritionists’ warnings about such diets.
“It was an OK process,” said Shana, 37. “I didn’t particularly love the food.”
As Nutrisystem sales and profit recover, Weight Watchers continues to stumble. Sales have fallen for six quarters as CEO Jim Chambers tries to revamp the products and expand the online business. After doubling last year, Nutrisystem shares are down 2 percent in 2014; Weight Watchers has sunk 30 percent. Nutrisystem rose 1.4 percent to $16.11 at the close today, and Weight Watchers gained 4.2 percent to $22.96.
Margo Schneider, an outside spokeswoman for Weight Watchers, declined to comment.
Some say Zier has an advantage as a woman running an enterprise aimed mostly at female consumers.
“To serve the market you want to look like the market”, said Deborah Gillis, the CEO of Catalyst, a New York-based research and advocacy group for women executives. “There are clear benefits to representing and understanding women.”
Zier said her approach to life is generally gender-neutral.
“I personally think I can run many different companies, and that it’s about understanding the customer,” she said. What “I brought to the table, as a female, was the experience -- the ability to listen to the customers and multitask.”