OK, all the 2nd quarter results are in for the publicly owned diet companies, and it's bad across the board. Q2 was terrible. Plus, lots of top management changes.
Weight Watchers: CEO resigns. Trouble over group leaders low pay. Revenues down 3.9% in Q2 and down 3.5% for first half of 2013. WW.com growth slows to just 6.6%. Full year guidance lowered. Sales expected to decline in high single digits for 2013. No info. on new program ideas for 2014.
NutriSystem: In the middle of a turnaround, new management. Q2 revenues down 22%, but net income in line with expectations. First half revenues down 20%.
Medifast: Top line sales growth slows to just 6% for the year, vs. 20% the past several years. Actual declines (-20%) in same store sales reported for its medical clinics and Medifast Direct sales channel (-4%). Saving grace was TSFL MLM channel, sales up 10%.
Jenny Craig: Closed 100 centers during the quarter. Need we say more?
So, what's the story? We all know it's a "challenging environment", but WHY? What are consumers and dieters thinking? Are more dieters just attempting to lose weight themselves? Can we blame it all on free nutrition and fitness apps? Are consumers just tired of dieting, period?
No one, including the "learned" Wall Street stock analysts are asking the right questions--i.e. what are consumers saying and thinking about weight loss programs. The analysts seem to have tunnel vision, focusing on one company's quarterly SG&A expenses and EBIDTA. No one asks about the effect of competitors' programs, consumer trends - the macro picture.
Let's face it, the economy still sucks, and this administration isn't doing anything to improve good job creation sand small business. The jobs being created are $10-12/hr. service jobs in restaurants, retailers and call centers. $12/hr. is a $25,000/year job - not much discretionary income for a 3-4 month $1,000 diet program. Unfortunately, Marketdata doesn't see much light at the end of the tunnel.
This year and next, diet companies will have to really offer something compelling and vlaue-packed to get dieters to sign on, or start looking abroad for growth, or maybe some untapped niches? (Hispanics, men, diabetics, teens, seniors).