Oprah Is Helping Weight Watchers Search for a New CEOby
Shares surge after third-quarter earnings exceed estimates
Revenue growth was first for the weight-loss brand since 2012
Oprah Winfrey, who bought a stake in Weight Watchers International Inc. last year and agreed to pitch the brand, has a new role with the company: helping find a new chief executive officer.
The media magnate doesn’t want the job herself, but is serving as an adviser as the company hunts for someone to replace Jim Chambers, who abruptly resigned in September, Chief Financial Officer Nick Hotchkin said in an interview.
“She’s busy doing lots of things, but we’re thrilled that she’s not only an active member and adviser but a board member too,” he said. “The entire board, including Oprah, is involved in the search.”
Weight Watchers, meanwhile, is starting show momentum as it tries to mount a comeback from a prolonged slump. The stock surged as much as 13 percent to $11.28 on Friday after the company posted third-quarter earnings that beat estimates. It was the biggest jump in about six months. Excluding some items, profit in the period was 53 cents a share, topping analysts’ average estimate of 45 cents.
Chambers announced he was leaving the company in September, sending the shares plummeting to the lowest in nearly a year. He handed the reigns to a trio of executives who now constitute the “interim office of the CEO.” That consists of Hotchkin, board member Christopher Sobecki and former Chief Operating Officer Thilo Semmelbauer.
Weight Watchers was hit hard by the rise of free fitness apps and other weight-loss technologies, contributing to three years of declining sales. The company has billions in debt, and its stock is heavily shorted by investors. Chambers, who took over in 2013, had worked to turn around the company by revamping its nutrition program and adding a social-networking component to its app. The idea was to adapt to a shift among dieters toward healthy eating, rather than calorie counting.
After years of declines, the company has now posted three straight quarters of subscriber gains as it enters the critical winter season, when New Year’s resolutions help the company generate about 40 percent of its new-member signups. And this year, Winfrey is poised to appear in advertisements, which the company hopes will help bring in new members. In North America, where Weight Watchers generates almost 70 percent of its revenue, subscribers were up 15 percent in the third quarter.
In addition, revenue gained 2.7 percent to $280.8 million, the first time the company has posted year-over-year sales growth in almost four years.
“We’re pleased with the sustained improvement in our metrics,” Hotchkin said. “We’re getting good feedback from consumers and good engagement with the more holistic program.”