QUOTE AND NEWS
SeekingAlpha  Mar 31  Comment 
By Robert Nowak CFA: Weight Watchers International (WTW) There have been some great articles here on Seeking Alpha regarding Weight Watchers stock and the favorable risk-reward profile it presents investors. I won't delve into all the...
SeekingAlpha  Mar 29  Comment 
About this author: Visit Socratism Weight Watchers International (WTW) is selling at very silly prices. The company is well known for its 50-year-old program which helps people lose weight. According to the company, 69%...
Benzinga  Mar 5  Comment 
MCG Capital (NASDAQ: MCGC) shares reached a new 52-week low of $3.97 after the company reported Q4 results. Ceres (NASDAQ: CERE) shares touched a new 52-week low of $1.01 after the company priced an underwritten public offering of 20,000,000...
SeekingAlpha  Feb 25  Comment 
By Izdihar Investments: Weight Watchers (WTW) insiders must have dreaded earnings release dates over the last year. Each quarter, the stock has seen a drop of at least 15% after earnings releases. But this is poised to change. Maybe thinking this...
SeekingAlpha  Feb 21  Comment 
By YCharts: Through fad diets and recessions, Weight Watchers International (WTW) has grown despite a business model that required customers to attend meetings and talk about their least-favorite topic: their weight. WTW Revenue (TTM) data by...
SeekingAlpha  Feb 21  Comment 
By Dieter Plas: Executive summary: It had bad Q4 figures and an overall bad 2013. Terrible outlook and guidance for 2014, EPS between $1.30-$1.60. Despite the 27% drop, it's still not 100% buy-worthy. I remain on the...
StreetInsider.com  Feb 18  Comment 
52-Week High: Rite Aid Corp. (NYSE: RAD) $6.35. Rite Aid up Tuesday after it and McKesson announced entering an expanded distribution agreement. The new five-year agreement, which extends through March 2019, creates efficiencies for both...
Benzinga  Feb 18  Comment 
Barclays released a research note Tuesday in which the firm downgraded Weight Watchers (NYSE: WTW) from Equal-Weight to Underweight and lowered the price target from $31 to $15, perhaps marking the first time the company is unhappy about weight...
Benzinga  Feb 18  Comment 
Weight Watchers International (NYSE: WTW) shares fell 4.43% to reach a new 52-week low of $21.12 after Barclays downgraded the stock from Equal-Weight to Underweight and lowered the target price from $31 to $15. Elbit Imaging (NASDAQ: EMITF)...
Benzinga  Feb 18  Comment 
Analysts at RBC Capital downgraded Range Resources (NYSE: RRC) from “outperform” to “sector perform.” The price target for Range Resources is set to $90. Range Resources' shares closed at $85.49 on Friday. Analysts at Morgan Stanley...




 

Weight Watchers International (NYSE: WTW) is a global company that offers a range of products and services related to dieting, weight loss, and weight maintenance. Weight Watchers' presence in over 25 countries worldwide has made it the top global provider of weight loss services, which include meeting services, food products, recipes, and publications. The obesity trend in the United States and the world at large has greatly expanded the weight loss industry as a whole. Around 1.3 million members attend around 50,000 Weight Watchers meeting and WeightWatchers.com has 763,000 subscribers.[1][2] The company generated $1.4 billion in revenue and $177 million in net income in 2009.[3]

Much of the company's success, however, is predicated on the willingness of consumers to spend on losing weight - a willingness which tends to decrease during weak economic environments. As a result of the sluggish economy, the company's net revenue fell 8.9% in 2009.[3] Furthermore, medical weight loss alternatives, fad diets, economic downturns, and competition from companies such as NutriSystem (NTRI) , Nestle (NSRGY) (who owns Jenny Craig and Lean Cuisine) and Kraft Foods (KFT) (who provide South Beach products) also pose a threat to Weight Watcher's success.

Company Overview

Weight Watchers is the number one international provider of weight management services with sales in over 25 countries. The growing trend of obesity , accompanied by greater health concerns and wealth consciousness, has enriched and expanded the weight management industry as a whole, which pulls in about $59 billion in the US alone.[4] The majority of Weight Watcher's revenues come from meeting fees.

Business Segments[5]

Weight Watchers' revenues come from four major sources: meeting fees through its officially licensed support groups, product sales (recipe books, Points calculators, pre-packaged meals, etc.), internet revenues, and licensing and franchise royalties.

Meeting Fees (58% of net sales): Weight Watcher's largest revenue source is its meeting fees, which members pay in order to attend weekly support and goal-setting meetings with other members and a "Leader." This fees vary according to the meeting location and financing options available; however, overall membership figures are the most obvious trend to look to when considering whether or not these revenues will continue to increase.[6]

Product Sales (20% of net sales): The company's second largest source of revenues is product sales. Weight Watchers sells products like pre-packaged meals, bars, snacks, cookbooks, and POINTS calculators and POINTS value guides (both related to the POINTS system that Weight Watchers members use to gauge food intake). The majority of these product sales are made to members of the company's weekly meeting system and its franchises. As a result, the success of the company's product sales is largely based on the success of its efforts to increase its meeting and franchise membership.

Internet Revenues (14% of net sales): Weight Watchers has taken advantage of the obesity trend in the United States to focus on drawing in long-term customers as subscribers, with almost 80% of U.S. Internet content revenue coming from subscriptions versus individual sales. The company's website draws income from the sale of subscriptions and advertising space.

Licensing & Franchise Royalties (7% of net sales): Weight Watchers licenses its brand and other intellectual property for certain foods and products to franchises and cooperative companies. In addition, the company draws revenue from royalty fees paid by its franchises (typically 10% of their meeting fee revenues), while also earning income from magazines and third-party advertisements in its publications. Weight Watchers has established partnerships with a number of companies in related fields.

Business Growth

FY 2009 (ended January 2, 2010)[3]

  • Net revenue fell 8.9% to $1.4 billion.
  • Net income fell 13% to $177 million.

Trends and Forces

U.S. economic fluctuations exert an influence on consumers' discretionary spending on weight management

A sluggish US economy tends to have an adverse affect on the weight loss industry. As consumers lose discretionary funds, luxuries like weight loss programs and dieting products lose their priority. As Weight Watchers CEO David Kirchoff noted, "when consumers are facing a sudden crisis over their savings, livelihood, and standard of living, the natural inclination is to comfort eat, not to lose weight."[7] Due to the sluggish economy, the company's net revenues fell 8.9% in 2009.[3]

The obesity trend in the United States and abroad boosts demand for Weight Watchers' products

The obesity trend in the United States and the world at large has greatly expanded the weight loss industry as a whole. Worldwide, it is estimated that the number of overweight and obese people is around 1.6 billion. According to the Marketdata Enterprises, 68% of Americans over the age of 19 are considered overweight of which half are considered obese. As a result, the weight management industry generates $59 billion in revenue annually in the US alone.[4] In the US, the company generates $916 million in revenue.[8] World-wide, Weight Watchers has taken advantage of this trend and the internet to focus on drawing in longterm customers as subscribers. The company has 763,000 active subscribers.[2]

Fad diets, competing weight loss services companies, and medical offerings provide alternatives to Weight Watcher's services and hurt its sales growth

Weight Watchers faces a number of competitors in the weight loss field, which include: self-help weight management regimens and other self-help weight management products and publications such as books, tapes and magazines; commercial weight management programs; Internet weight management approaches; dietary supplements and meal replacement products; weight management services administered by doctors, nutritionists and dieticians; surgical procedures; the pharmaceutical industry; government agencies and non-profit groups that offer weight management services; and fitness centers. Medical developments, such as the weight loss drug Alli, have caused major dips in the weight loss market.

Competition

Weight Watchers is the world's largest provider of weight loss and weight management products, and the diversity of its products and services has brought it competition, both direct and indirect, from a variety of sources. Though the company faces indirect competition from trend diets and prescription/non-prescription weight loss supplements, its main competitors are Nestle (NSRGY), the company that owns the Jenny Craig and Lean Cuisine brands, NutriSystem (NTRI), and LA Weight Loss.

  • NutriSystem (NTRI): NutriSystem offers customers a home-delivery meal program that includes balanced, pre-prepared, portion-controlled (smaller) meals.
  • LA Weight Loss: LA Weight Loss offers a website similar to Weight Watchers' in that it seeks to draw in subscribers to the LA Weight Loss and dieting program, which operates out of centers around the country.
  • Slimming World: In Britain, Slimming World is bigger than Weight Watchers, with 7,000 groups run by 2,700 self-employed weight loss Consultants who have all lost weight following an eating plan based on the principles of satiety. The plan encourages members who attend group to choose healthy, filling foods without having to count, weigh or measure and was started by Margaret Miles-Bramwell in 1969.

References

  1. WTW 2009 10-K "Overview" pg. 1
  2. 2.0 2.1 WTW 2009 10-K "Weight Watchers eTools" pg. 4
  3. 3.0 3.1 3.2 3.3 WTW 2009 10-K "Selected Financial Data" pg. 26
  4. 4.0 4.1 2009 WTW 2009 10-K "The Global Weight Management Market" pg. 1-2
  5. WTW 2009 10-K "Overview" pg. 29-30
  6. | Weight Watchers.com, "How Weight Watchers Works - Meetings - What happens at a meeting?"
  7. | Seeking Alpha, "Weight Watchers International: Time for the Company to Go on a Debt Diet?" January 11, 2009
  8. WTW 2009 10-K "Global Operations" pg. 31
Wikinvest © 2006, 2007, 2008, 2009, 2010, 2011, 2012. Use of this site is subject to express Terms of Service, Privacy Policy, and Disclaimer. By continuing past this page, you agree to abide by these terms. Any information provided by Wikinvest, including but not limited to company data, competitors, business analysis, market share, sales revenues and other operating metrics, earnings call analysis, conference call transcripts, industry information, or price targets should not be construed as research, trading tips or recommendations, or investment advice and is provided with no warrants as to its accuracy. Stock market data, including US and International equity symbols, stock quotes, share prices, earnings ratios, and other fundamental data is provided by data partners. Stock market quotes delayed at least 15 minutes for NASDAQ, 20 mins for NYSE and AMEX. Market data by Xignite. See data providers for more details. Company names, products, services and branding cited herein may be trademarks or registered trademarks of their respective owners. The use of trademarks or service marks of another is not a representation that the other is affiliated with, sponsors, is sponsored by, endorses, or is endorsed by Wikinvest.
Powered by MediaWiki