August 5, 2022
WW (Weight Watchers) today reported its 2nd quarter 2022 results.
According to management, Sima Sistani, the Company’s CEO… “2022 will be a transition year while we execute on a number of initiatives to simplify the business and build a foundation for profitable growth.”
Amy O’Keefe, the Company’s CFO, said, “The actions that we have taken to right-size our cost structure enabled us to expand our adjusted operating margin despite revenue pressure in the second quarter. For the balance of the year, we are focused on stabilizing subscriber trends, while continuing to manage costs tightly in the current environment.”
End of Period Subscribers in Q2 2022 were down 12.3% versus the prior year period, primarily driven by declines in the Digital business in all major geographic markets. Q2 2022 End of Period Digital Subscribers decreased 16.5% versus the prior year period. Q2 2022 End of Period Workshops + Digital Subscribers increased 10.6% versus the prior year period.
2022 Restructuring Plan: In connection with its previously announced 2022 restructuring plan, the Company recorded restructuring charges of $19.1 million in Q2 2022. The Company expects to record an additional $8 million of restructuring charges in fiscal 2022, increasing its full year estimate of restructuring charges to $27 million, up from its prior range of $18 million to $22 million.
Full year 2022 revenues are expected to be in the range of $1.05 billion to $1.09 billion. Prior revenue guidance was in the range of $1.09 billion to $1.14 billion.
Q2 Highlights:
- Q2 2022 End of Period Subscribers of 4.3 million
- Q2 2022 Revenues of $269.5 million (decrease of 10%)
- Q2 2022 Gross Margin of 60.5%; Q2 2022 adjusted gross margin of 61.9% excluding the net impact of restructuring charges
- Q2 2022 Operating Income of $13.4 million; Q2 2022 adjusted operating income of $58.3 million excluding the impact of non-cash intangible impairment charges and net impact of restructuring charges
- Revised FY 2022 Guidance: Revenues in the range of $1.05 billion to $1.09 billion.
The complete Press Release, with detailed financial tables, can be found here, or at the company’s website:
https://finance.yahoo.com/news/ww-announces-second-quarter-2022-200100409.html
Conference Call Information
Management reported that their physical footprint is now down to 406 company locations and 700 3rd-party sites. The firm has reduced the number of SKUs. It will cease the Curbo program for children as of August 19. The Digital 360 program has been closed. A new Marketing Director will start on Aug. 19. The company will partner with Abbott and their Freestyle Libre CGM (continuous glucose monitoring) program for diabetics, to be launched in 2023.
Management said that the Personal Points program could have done better, and that it was too complex for consumers. WW spent $15 million less on marketing in the 1st half of 2022, and will shift that into the 2nd half. They expect total spend of $255 million for the year, down from 2021. WW expects continued headwinds in the 2nd half, and lower revenues. Management says that the company will place more emphasis on weight loss in its messaging. It had drifted away from an emphasis on weight loss. They say that the cultural landscape has shifted (how? please explain).
Marketdata Commentary
So, the company is in a transition year, focused on cost cutting, simplification and streamlining. And, it will return to a prime focus on weight loss, and in-person meetings at its studios. Seems like WW is always in transition, with ever-changing CEOs and marketing directors, always tweaking its services and marketing plans. When will they hit it out of the park again? Again, no mention of how competitors are hurting them or doing better and what they can learn from them. Also, do they use consultants any more? And, no mention of Oprah Winfrey – is she doing any promotions for them at all in 2022?