Weight Watchers Plunges After Oprah Deal Fails to Halt Slideby and
Company posts surprise fourth-quarter loss of 3 cents a share
Active subscriber count slips 4.8 percent from year earlier
Weight Watchers International Inc. shares tumbled 29 percent after a high-profile partnership with Oprah Winfrey failed to reverse the company’s financial decline last quarter.
The company posted a loss of 3 cents a share in the fourth quarter, excluding some items, according to a statement on Thursday. Analysts had estimated a gain of 2 cents on average. Weight Watchers’ active subscribers fell 4.8 percent from a year earlier, though that was less of a decrease than the company experienced in the third quarter.
The results suggest that investors will have to wait longer for Winfrey and Weight Watchers’ executive team to turn around the business. After Winfrey announced her partnership with the company in October, investors sent the stock surging, hoping that her celebrity status would help propel the long-ailing weight-loss program. The shares reached a 12-month high of $28.05 on Nov. 19.
The stock has retreated in recent months, and the latest results sent it down further. The shares closed at $11.01 on Friday in New York, the biggest one-day drop in a year.
Down $100 Million
Winfrey has had a front-row seat for the roller-coaster ride. As part of her agreement with the company, she acquired a 10 percent stake. That investment was worth about $178 million at its peak in November. With Friday’s plunge, the value has now dropped more than $100 million. Winfrey has said that her total holdings in Weight Watchers amount to almost 15 percent when options are included.
The company’s revenue fell 21 percent to $259.2 million in the fourth quarter, with the strong U.S. dollar further hampering results. Weight Watchers expects 2016 revenue to be up in the “low single digits.” Earnings will be 70 cents to $1 a share this year, Weight Watchers said.
Meanwhile, Weight Watchers’ payments to Winfrey weighed on profit last quarter. The company paid out $8.3 million, or 13 cents a share, as part of the transaction. Including that amount and other one-time charges, its quarterly loss was 18 cents a share.
Winfrey, 62, began appearing in ads endorsing Weight Watchers in December. One of the clips -- which she posted with the tweet “Eat bread. Lose weight. Whaaatttt?” -- focused on her love of bread. Winfrey said she has lost 26 pounds.
“This is the joy for me,” she said in the ad. “I love bread.”