Weight Watchers Has Record Drop After Suspending DividendDuane D. Stanford
Weight Watchers International Inc., the weight-control program provider endorsed by celebrities Jennifer Hudson and Jessica Simpson, had a record decline in shares after the company suspended its dividend as it struggles to recruit members.
Weight Watchers fell 20 percent to $32.11 at the close in New York, the biggest drop since the company went public in November 2001. The shares have retreated 39 percent this year, compared with a 23 percent gain for the Standard & Poor’s 500 Index.
Declining enrollment in Weight Watchers programs may hurt 2014 sales by a “low double-digit” percentage, the New York-based company said yesterday on a conference call. Directors elected to suspend the quarterly cash dividend, which will save $39 million for financial flexibility and growth initiatives, the company also said in a statement.
Better-than-expected quarterly results were “overshadowed by weaker-than-expected 2014 guidance and a dividend cut,” Dara Mohsenian, an analyst for Morgan Stanley & Co. in New York, said today in a note. He rates the shares equal-weight, the equivalent of a hold.
Third-quarter net income fell 11 percent to $60.3 million, or $1.07 a share, the company said.