Feb. 26, 2016 - The company reported that 2015 revenues declined 16.3% to $1.16 billion, a huge drop. Fiscal 2015 net income was $32.9 million versus $117.8 million in the prior year. The firm has benefited from Oprah Winfrey's investment and her being a new ad spokesperson, but not to the degree many were expecting.
Q4 2015 2015 revenues decreased 17.2% on a constant currency basis versus the prior year. Q4 2015 total paid weeks were down 16.8% vs. the prior year period, with an Online paid weeks decline of 16.4% and a meeting paid weeks decline of 17.3%. These declines were driven primarily by the lower active subscriber base at the start of Q4 2015, as well as the lower number of weeks in Q4 2015, versus the prior year period.
Fourth quarter 2015 service revenues for North America were down 18.0%.
Fourth quarter 2015 service revenues for the UK were down 10.5%.
Fourth quarter 2015 service revenues for Continental Europe (CE) were down 10.9%
According to CEO Jim Chambers: "The partnership with Oprah Winfrey is off to a strong start. Our transformation momentum is building, with positive recruitments this winter season setting a solid foundation for revenue growth and increased profitability."
In Q4 2015, the company launched SmartPoints™ as part of its new, global Beyond the Scale program and announced its strategic partnership with Oprah Winfrey.
Q4 2015 revenues were $259.2 million. End of period active subscribers were down 4.8% for Q4 2015 vs. an improvement from being down 12.7% for Q3 2015 versus the prior year period, reflecting strong recruitment growth following the early December global launch of the company's new program.
Horrible full year results all around.
We at Marketdata think that Oprah came to the party very late in the year, her commercials not appearing until December. Therefore, one can't expect miracles in such a short time. We are likely to see more benefit during Q1 2016.
Guidance: Management expects 2016 revenue increase in the low single digits. NACO full year revenues are projected up in the high single digits, the UK down in low single digits, and Continental Europe down low single digits.
The Q4 results prove that even Oprah can't cure all of Weight Watcher's problems. Yes, she has stopped the bleeding somewhat, but she can do only so much until top management realizes that major strategic issues still remain--a one-size-fits-all program with no niche programs for seniors, diabetics, men, or teens, ignoring the under 35 generation of new dieters, no retail partners, a hidden retail street presence, over-reliance on tech spending to beef up apps (too late to the party), inadequate penetration of the large healthcare organizations market segment (only one deal with Humana), and an aging workforce of 10,000 group leaders with low morale (low pay and no career path).
The company also points to a new Indiana University study showing that adults with pre-diabetes who followed WW lost more weight and had better blodd glucose control than DIY dieters. Sure, that's good news--but THE STUDY WAS FUNDED BY WEIGHT WATCHERS! I think we all know that strategy by now and can see through it.
Complete press release and financial tables can be found here: