Oct. 29, 2014 -- Weight Watchers reported its 3rd quarter results. Main results were that:
Third quarter 2014 results include:
- Revenues of $345.2 million, down 12.9% versus the prior year period, with total paid weeks down 12.4%.
"While our Q3 financial results were substantially below 2013 levels, they reflect a slight improvement in our topline trends and demonstrate continued cost discipline," commented Jim Chambers, the company's President and CEO. "Turning around recruitment declines remains our top priority for 2015. To do this, we are focusing on the upcoming launches of our new offerings and the repositioning of our brand."
Q3 2014 revenues decreased 13.5% on a constant currency basis versus the prior year period. This decrease was primarily driven by lower revenues in North America. Q3 2014 total paid weeks were down 12.4% as compared to the prior year period, with an Online paid weeks decline of 12.6% and meeting paid weeks decline of 12.2%. These declines were driven by lower active subscriber bases at the start of the quarter for both Monthly Pass and Online and lower recruitments versus the prior year period.
Q3 2014 service revenues for the North America business were down 17.2% on a constant currency basis versus the prior year period driven by a 16.9% decline in total paid weeks. As has been the case throughout 2014, the North America business continued to face strong competition for consumer trial from an evolving competitor set, including mobile apps and activity monitors, during the third quarter 2014.
The company raised its full year fiscal 2014 adjusted earnings guidance to between $1.95 and $2.05 per fully diluted share compared to its previously provided adjusted earnings guidance of between $1.65 and $1.85 per fully diluted share. The Company's full year 2014 earnings guidance incorporates the fact that fiscal 2014 includes a 53rd week
Conference Call Info. & Commentary:
Marketdata analysts listened to the company's conference call at the end of the day, for additional insights. Management hinted at providing more 1-on-1 personal advice online, more personalization, and that it will try to reach untapped demographic segments. They stated that 2015 will be another "investment' year and that they will start the new 2015 diet season with 400,000 less active clients than the prior year. 2015 is seen as being an inflection point for the firm.
Continental Europe and the U.K. have been stronger performers than the U.S. because there are a greater number of new competitors in the U.S., negatively impacting the initial trial of a diet plan for consumers.
Management did not provide any detail at all about new programs or services for the 2015 diet season, which frustrated analysts and resulted in the stock price drop the next day. As usual, the stock analysts asked the typical financial questions, but no questions about competitors or market dynamics.
Marketdata disagrees with recent personnel additions such as Mr. Herrera. His resume/background is focused on the FOOD sector...Press release content: "Herrera brings to Weight Watchers more than 15 years of marketing experience across food, beverage and confectionary categories. His leadership at top-tier consumer packaged goods organizations has positively impacted marquee brands including Pepsi, Campbell's Soup, Pillsbury, V8 Vegetable Juice and Trident Gum. Most recently, he was Chief Marketing Officer of Materne where he helped GoGo squeeZ™ reach its highest market share since 2009. Prior to Materne, Herrera was Vice President of Marketing at Perfetti Van Melle, maker of Mentos and Airheads candies."
OK, great food industry experience but WTW is NOT a food company! It's a SERVICE company that provides meetings, advice and a way of dealing with food, via online services (WW.com) and its weekly meetings with group leaders. Apparently, what CEO Jim Chambers is doing is bringing in people he knows from the food sector--WRONG CHOICE! As long as he continues this, the company will be on the wrong path.
Company financials for the quarter can be found here: