Weight Watchers Shares Plummet, Oprah Loses $24 Million
Oprah Winfrey’s name carries weight in the marketplace. Weight Watchers has been named the number one diet program by U.S. News and World Report. The merge of these two entities should be epic. However, their collaboration has not gained the momentum expected of it.
Oprah’s venture with Weight Watchers is not fairing as well as her other proteges, like Dr. Oz, Steve Harvey, and The Law of Attraction movement, nicknamed “The Secret.”
For the last few years, Weight Watchers has taken huge financial hits. In 2014, about 800,000 people attended Weight Watchers meetings, which is a decline from its 1.3 million in 2013. In the first half of 2015, sales were down nearly 22 percent and profits down almost 50 percent, CNN Money reported.
Weight Watchers International has more competitors than Jenny Craig and Quick Weight Loss in today’s marketplace. They have more mobile and digital based competition that offers lower prices without the inconvenience of weekly meetings. With Lose It, a mobile app Nike Run, and Fitbit trackers, many people are taking a different weight loss approach. The company has solicited celebrities in the past, such as Jennifer Hudson and Jessica Simpson, to represent the company publically. The concept created buzz with their followers, urging them to continue with Weight Watchers.
Surprise! Jennifer Hudson is the New Face (and Body) of Weight Watchers – Multi-talented actress and singer… http://t.co/zkfLb9WPCm
— Carissa Godbott (@carissargodbott) September 26, 2015
After Hudson’s four-year commitment to the company, they cut ties. After strategic planning, the company solicited mogul Oprah Winfrey as the next big face of Weight Watchers. In October 2015, Winfrey put her public stamp of approval on the weight loss program. Weight Watchers announced in the same month that Winfrey would make a $43.5 million investment for a 10 percent stake in the company and a chair on their board of directors.
Oprah Winfrey loses 26 pounds and Weight Watchers stock soars: Oprah Winfrey’s recent weight loss i… https://t.co/FAq2N587Pr #JobCircle
— JobCircle.com (@JobCircle) January 26, 2016
Hours after her announcement, Weight Watchers stocks increased from $6.79 to more than $13. In November 2015, its shares peaked at $28.
In January, the peak season for weight loss resolution peak, Oprah shared her weight loss journey with a video and tweet. She announced she’d lost 26 pounds with the program all while eating her favorite food, bread. She made nearly $20 million from the tweet alone, and Weight Watcher stock rose by 20 percent.
#fun #gif commercial, oprah, bread, oprah winfrey, weight watchers, i love bread – https://t.co/9vhXe8ymJM #gif #… https://t.co/VlLz4dAFUr
— Gif Fun Animated (@giffunimages) January 29, 2016
On Friday, reports show Weight Watchers shares plummeted by 30 percent after the company announced a quarterly loss of $11 million.
“This is going to be a slow-building transition, but you’re going to see numbers move a lot higher,” Alex Fuhrman, who covers the stock for Craig-Hallum Capital Group, said Friday on CNBC’s Power Lunch.
Oprah Winfrey may have shed some pounds using Weight Watchers. But she may have lost something else — influence. And money.
— Miyoko Noad (@mapiqudowawy) February 29, 2016
Despite Fuhrman’s optimism, Oprah has lost $24 million in this venture to date. Active subscribers fell to 4.8 percent from the previous year to 2.4 million. However, according to a recent Twitter poll by Real Money, 42 percent of responders say celebrity endorsements matter.
Do celebrity endorsements have a significant effect on a company's fortunes? https://t.co/icYrTJN2gs
— Real Money (@realmoney) February 26, 2016
Fuhrman said, “Most of the revenue you have in Q1 is from customers who joined prior to Oprah’s involvement, and there frankly weren’t very many of those customers then.”
Despite the crash, in Monday’s trading, Weight Watchers shares were up more than 6 percent, slowly recovering from last week. Analysts believe that Oprah Winfrey’s attachment with the weight loss management program will pay dividends.
Weight Watchers has completely overhauled its program for 2016. The company is moving into weight management rather weight loss. The changes were implemented to budge active subscribers. The adjustment included allowing users to merge data from Fitbit and other fitness trackers into their system. Fitness is still a big concept in the program, so Weight Watchers wanted to simplify it for users who’ve invested in fitness trackers.
The new “Beyond the Scale!” program is fully digital with personal coaching available. The new concept does not take away the fundamental concept of eating what you want but it steers active members toward healthier choices with it point system approach.
[Image via Ken Woltter/Shutterstock]
