Feb. 27, 2018 – According to CEO Mindy Grossman: “We had a highly positive consumer response to the launch of our WW Freestyle™ program in December, which resulted in a strong finish to the year. More people are engaging with our brand and we ended 2017 with approximately 600,000 more members than a year ago, representing 23% growth,” “This excellent momentum has continued into 2018 and with our bold new purpose to ‘Inspire healthy habits for real life,’ we have an exciting opportunity to truly bring wellness to all.”
“Our 2017 financial performance demonstrated the power of our business model, and we delivered both strong margin expansion and cash generation,” said Nick Hotchkin, the Company’s CFO. “With 2018 off to a great start, we expect revenue to grow by almost 20% to approaching $1.55 billion for the full year and the rate of operating profit growth to exceed the rate of revenue growth.”
Some Q4 2017 highlights:
- End of Period Subscribers up 23% year-over-year to 3.2 million
- Total Paid Weeks in Q4 2017 up 19% year-over-year; Total Paid Weeks in FY 2017 up 17% year-over-year
- Revenues in Q4 2017 up 17% year-over-year to $312 million; FY 2017 revenues up 12% year-over-year to $1.3 billion.
2017 Full-year performance
- Total Paid Weeks in fiscal 2017 were up 17.1% versus the prior year, driven by growth in all major geographic markets. Fiscal 2017 Meeting Paid Weeks increased 9.7% and Online Paid Weeks increased 23.1% versus the prior year.
- Revenues in fiscal 2017 were $1,306.9 million. On a constant currency basis, fiscal 2017 revenues increased 12.1% versus the prior year.
- Operating Income in fiscal 2017 was $267.3 million, and net income was $163 million.
The company expects revenues to grow 19% to $1.55 billion, a strong start to its 3-year goal of $2 billion by 2020. North American operations (NACO) are expected to grow in the mid-teens, Continental Europe in the low 20% range, and the UK up in the mid-teens. Marketing spend is expected to be flat at $240 million, with $100 mill. spent in Q1. The company has set a goal of 5 million subscribers by 2020. Gross margin is expected to improve by 300 basis points.
WTW will be removing all artificial ingredients, artificial sweeteners and preservatives from its food items, gradually. The company expects to enter new geographic markets and plans to modernize its branding and packaging globally, to meet different cultural requirements.
In the 3rd quarter of 2018, WW plans to enter licensing with a partner to launch a fresh food meal kits product line. The firm also plans to expand distribution of food items beyond meeting sites.
The complete Press Release and financial tables can be found here:
Weight Watchers posted a very strong year and is projecting an even better 2018–19% sales growth vs. 12% in 2017. This is a bold statement, reflecting optimism across all global markets. Apparently, they are expecting a continuation of positive momentum from Oprah, DJ Khaled, and acceptance of the Freestyle program. When questioned in the conference call about where the substantial growth will come from in 2019 and 2020, management didn’t really specify, but we assume it would be at least in part from deals with other large healthcare organizations and worksite-based programs, and expansion into as yet untapped geographic markets (perhaps China? Latin America?). 19% revenue growth this year ? — time will tell.