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Weight Watchers Reports 2nd Quarter Results, CEO Resigns

Marketdata Commentary - Lots of Questions, No Answers

* Why did David Kirchoff abruptly resign, after 14 years with the company? No advance warning, not even 30 days? Troubling. Did he simply give up on the company after seeing that things are just not working?

* Why isn't management talking about the compensation situation with the group leaders' complaints about low pay? Did they raise wages and quell the rebellion, or not? Group leaders are a critical competitive advantage. If there's a mass exodus, that's major trouble.

* Why doesn't management discuss their progress on revamping and modernizing the 850 U.S. leased retail sites? Is it done, 75% complete? Did it have a positive affect on attendance. What? They were supposed to extend hours open to capture walk-in traffic. Meetings only held one day a week--major underutilization of these facilities.

* Any tests in the China market? No news.

* Time to admit that WW.com is cannabalizing meetings business and deal with it?

* Any new plans on how to respond to the 2014 implementation of Obamacare and all the new people entering the healthcare system?

WHAT THE HECK IS GOING ON GUYS????

* And, just as surprising, why aren't the Wall Street analysts that follow Weight Watchers asking these questions during the Q&A portion of the conference call?

James Chambers has been appointed President and CEO effective July 30, 2013. He has also been elected to the Company's Board of Directors as of such date.  Chambers succeeds David Kirchhoff who notified the company's Board of Directors of his resignation, effective as of July 30, 2013, as CEO and a Director of the company to pursue other opportunities. Mr. Kirchoff had been with the company for 14 years.

Second quarter 2013 revenues decreased 3.9% on a constant currency basis versus the prior year period, resulting from lower revenues in the meetings business as it experienced weaker volumes globally, most notably in North America and the UK.

Q2 2013 total paid weeks were down 2.5% as compared to the prior year period.  Online paid weeks increased 4.4% versus the prior year period, while meeting paid weeks declined 10.4% versus the prior year period.

First half 2013 revenues decreased 3.5% on a constant currency basis versus the prior year period, to $952 million.  This decrease resulted from lower revenues in the meetings business as it experienced weaker volumes globally, most notably in North America and the UK.  This decline in meetings business revenues was partially offset by revenue growth in the WeightWatchers.com business.

First half 2013 total paid weeks were down 0.6% as compared to the prior year period.  Online paid weeks increased 7.3% versus the prior year period, while meeting paid weeks declined 9.3% versus the prior year period.

First half 2013 operating income increased 0.6% on a constant currency basis versus the prior year period.  The increase in operating income was driven by lower marketing expense, primarily in the United States from the elimination of inefficient digital advertising and the lack of a men's campaign in the first half 2013.

Full Year Fiscal 2013 Earnings Guidance

The company has revised its full year 2013 earnings guidance to a range of between $3.55 and $3.70 per fully diluted share as compared to its previously provided range of between $3.60 and $3.90 per fully diluted share.

See complete financials and segment, regional breakdowns here:
Marketdata Commentary - Lots of Questions, No Answers

* Why did David Kirchoff abruptly resign, after 14 years with the company? No advance warning, not even 30 days? Troubling. Did he simply give up on the company after seeing that things are just not working?

* Why isn't management talking about the compensation situation with the group leaders' complaints about low pay? Did they raise wages and quell the rebellion, or not? Group leaders are a critical competitive advantage. If there's a mass exodus, that's major trouble.

* Why doesn't management discuss their progress on revamping and modernizing the 850 U.S. leased retail sites? Is it done, 75% complete? Did it have a positive affect on attendance. What? They were supposed to extend hours open to capture walk-in traffic. Meetings only held one day a week--major underutilization of these facilities.

* Any tests in the China market? No news.

* Time to admit that WW.com is cannabalizing meetings business and deal with it?

* Any new plans on how to respond to the 2014 implementation of Obamacare and all the new people entering the healthcare system?

WHAT THE HECK IS GOING ON GUYS????

* And, just as surprising, why aren't the Wall Street analysts that follow Weight Watchers asking these questions during the Q&A portion of the conference call?

James Chambers has been appointed President and CEO effective July 30, 2013. He has also been elected to the Company's Board of Directors as of such date.  Chambers succeeds David Kirchhoff who notified the company's Board of Directors of his resignation, effective as of July 30, 2013, as CEO and a Director of the company to pursue other opportunities. Mr. Kirchoff had been with the company for 14 years.

Second quarter 2013 revenues decreased 3.9% on a constant currency basis versus the prior year period, resulting from lower revenues in the meetings business as it experienced weaker volumes globally, most notably in North America and the UK.

 

Q2 2013 total paid weeks were down 2.5% as compared to the prior year period.  Online paid weeks increased 4.4% versus the prior year period, while meeting paid weeks declined 10.4% versus the prior year period.

 

First half 2013 revenues decreased 3.5% on a constant currency basis versus the prior year period, to $952 million.  This decrease resulted from lower revenues in the meetings business as it experienced weaker volumes globally, most notably in North America and the UK.  This decline in meetings business revenues was partially offset by revenue growth in the WeightWatchers.com business.

 

First half 2013 total paid weeks were down 0.6% as compared to the prior year period.  Online paid weeks increased 7.3% versus the prior year period, while meeting paid weeks declined 9.3% versus the prior year period.

 

First half 2013 operating income increased 0.6% on a constant currency basis versus the prior year period.  The increase in operating income was driven by lower marketing expense, primarily in the United States from the elimination of inefficient digital advertising and the lack of a men's campaign in the first half 2013.

 

Full Year Fiscal 2013 Earnings Guidance

The company has revised its full year 2013 earnings guidance to a range of between $3.55 and $3.70 per fully diluted share as compared to its previously provided range of between $3.60 and $3.90 per fully diluted share.

See complete financials and segment, regional breakdowns here

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