Following are financial highlights for the quarter ended March 31, 2013:
Global engagement as measured by paid weeks up 1.4% versus the prior year period
Internet revenues of $140.8 million, up 10.9% versus the prior year period, with Online paid weeks up 10.3% and end of period active Online subscribers up 6.2% versus the prior year period
Early progress with the firm's cost savings program
Following the quarter end on April 2, 2013, successfully refinanced and extended the maturity of company long-term debt to take advantage of favorable market conditions.
First quarter 2013 revenues decreased 3.2% to $487 mill. on a constant currency basis versus the prior year period, resulting from lower sales in the meetings business as the company experienced weaker volumes globally, but most notably in North America and the UK.
First quarter 2013 meeting revenues for the North American meetings business (NACO) were down 7.3%.
First quarter 2013 International meeting revenues were down 10.8%.
The WeightWatchers.com business continued to deliver double-digit growth in the first quarter of fiscal 2013, with Internet revenues up 10.9% to $140 million. Online paid weeks were up 10.3%, and end of period active Online subscribers were up 6.2%, versus Q1 2012.
"As we previously indicated, the winter diet season proved to be challenging for recruitment across our businesses given a weak consumer backdrop and an intensely competitive environment. In response, we have made several adjustments to improve our position in the market with consumers, including new advertising campaigns. Further, we are gaining early traction with our cost savings program while continuing to work to innovate our core product offerings to better enable us to increasingly address the ever growing obesity epidemic," commented David Kirchhoff, CEO.
In the conference call on May 2, management did admit that the explosion of free weight loss apps were having an effect on their business. They also mentioned new online ads featuring Sat. Nite Live's Ana Gasteyer. Changes will be made to NACO group leader compensation, in response to the uproar over low wages.
The company will not be investing in ad campaigns targeted to male dieters, and the firm will cut its marketing spend by $40 million this year. Tight cost controls continue. Management said that WW spent $344 million on marketing in 2012, equal to 19% of total revenues. The UK market and continental Europe remain weak, but the firm cites success in the B2B market, hospital systems and Chico's.