QUOTE AND NEWS
SeekingAlpha  Aug 20  Comment 
By Unconventional Capital Wisdom: Mr. Market has continued to be pessimistic with Weight Watchers (NYSE:WTW) because he believes the continued decline of the meetings and online are likely to persist into the future. We have outlined previously...
SeekingAlpha  Aug 14  Comment 
ByMarshall Hargrave: Weight Watchers (NYSE:WTW) posted 2Q earnings of earnings of $0.98 a share (versus consensus of $0.77) and revenues came in at $398 million (above $388 million consensus). Shares are up 14% over the last month. The company...
Benzinga  Jul 31  Comment 
Weight Watchers (NYSE: WTW) shares wallowed Thursday on weak second-quarter results while analysts raised worries about an eroding subscriber base. Weight Watcher's shares have lost more than 34 percent year to date as the company struggles...
Forbes  Jul 31  Comment 
In trading on Thursday, consumer services shares were relative leaders, down on the day by about 0.1%.  Leading the group were shares of Service Corporation (SCI), up about 4.4% and shares of Weight Watchers International (WTW) up about 2% on the...
SeekingAlpha  Jul 31  Comment 
Weight Watchers International, Inc. (NYSE:WTW) Q2 2014 Results Earnings Conference Call July 30, 2014, 05:00 PM ET Executives Corey Kinger - Brainerd Communicators, Inc. Jim Chambers - President, Chief Executive Officer, Director ...
Benzinga  Jul 30  Comment 
Weight Watchers International (NYSE: WTW) shares trended down sharply in the after-hours session after posting sizable declines in both second-quarter profits and revenue. Despite this, the company beat top-line expectations and raised its...
Wall Street Journal  Jul 30  Comment 
Weight Watchers International Inc. said its second-quarter earnings fell 17% on continued declines in the company's weight-loss meeting attendance, but the company said its transformation "remains on track" and it increased its 2014 earnings...
TheStreet.com  Jul 30  Comment 
NEW YORK (TheStreet) -- Weight Watchers International  surged in after-hours trading on Wednesday after the company reported second-quarter earnings that beat analysts' expectations. The company reported net income, excluding items, of $55.6...
SeekingAlpha  Jul 16  Comment 
By Hanbo Xiao: The weight-loss industry is comprised of fads and staples. Weight-loss fads are ideas that intrigue consumers, capture their pockets for a brief moment, but dissipate when the consumer sees no results. Weight-loss staples are...
Market Intelligence Center  Jul 15  Comment 
A covered call identified by MarketIntelligececenter.com's patented algorithms on Weight Watchers International Inc. (WTW) could yield about 9.51% (18.66% annualized, for comparison purposes only) in 186 days. Pair a long position in the stock...




 

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
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