(813) 971-8080

7210 Wareham Drive, Tampa, FL 33647

WW Reports Grim Results

Feb. 26, 2019 – As reported in a company press release:

“2018 was a significant year for WW. We launched WW FreestyleTM, built an expanded technology ecosystem, rebranded to WW and reinforced our mission to become the world’s partner in wellness,” said Mindy Grossman, President and CEO. “While we are proud of our accomplishments in 2018, we had a soft start to 2019 versus last year’s strong performance with the launch of WW Freestyle. Given our Winter Campaign did not recruit as expected, we have been focused on improving member recruitment trends. We quickly moved to course correct, including introducing new creative with a stronger call-to-action and further optimizing our media mix.”

Grossman continued, “While we are disappointed with our start to 2019, we are confident that our strategy to focus on providing holistic wellness solutions leveraging our best-in-class weight management program is the right path to support long-term sustainable growth. Looking ahead, I’m happy to say that Oprah Winfrey will play a central role in our upcoming TV and digital marketing campaign for Spring..”

2018 Performance metrics:

  • Revenues in Q4 2018 of $330 million, FY 2018 Revenues of $1.5 billion, up 15%.
  • 3.9 mill. active subscribers, up 22%
  • 40% of recruitments take place in Q1
  • Total Paid Weeks in FY 2018 up 26% year-over-year
  • $237 mill. cash on hand
  • Service Revenues in fiscal 2018 were $1,273.2 million. These revenues increased 16.7% versus the prior year. 
  • Product Sales and Other in fiscal 2018 were $240.9 million, up 5.3%. 
  • Net Income in fiscal 2018 was $223.7 million compared to $163.5 million in the prior year. 

2019 Guidance

  • Revenues of $1.4 billion forecast, down 7.5% from 2018
  • Marketing spend will be $250 million (vs. $226 mill. in 2018), $120 mill. in Q1 2019

Managment reported adding two new members to the Board, Tracy Brown and Julie Boorstein. They reported that members’ average tenure is more than 9 months, one of the few bright spots. They also said that they have taken corrective marketing actions, with a greater focus on weight loss, stronger calls to action, new radio spots, reallocated spend, and Oprah being more prominent in ads, as well as optimizing the marketing mix. As for the meeting sites, they are now holding open houses and will continue with modernization. They pledge more personalization too.

The complete Press Release with financial tables can be found here:


Marketdata Commentary

Well, quite a grim report from WW overall. The all-important Q1 2019 is off to a bad start with little chance to make it up later on this year. Revenue guidance of $1.4 billion expected to be down 7.5% from 2018. Looks like the goal of $2 billion by 2020 will not be reached. Management described Q1 so far as the “perfect storm” of negative events–some external and some internal.

One thing we didn’t hear discussed in the conference call is how much competitors affected them. What about Jenny Craig, Medifast, Herbalife, Atkins, and NutriSystem? Does what they do have NO effect on WW? Medifast just came off a 60% sales gain to $501 million in 2018 and is projecting revenues of $700 million this year. Watch out for them, as they expand and launch in Asia. Might the MLM model and health coaches be appealing to more dieters? Worth some research, I’d say.

Management mentioned the popularity of the Keto diet plan. Yes, that’s PART of it, but there’s more. No one has mentioned the very bad winter weather, which affects in-center meeting attendance. The Polar Vortex created some severe cold in the Midwest and Northeast, coupled with many storms and heavy snow. That matters.

Comparisons can be made here to another marketing debacle that’s well known–Coca Cola’s decision to change the formula from original Coke to Coke Classic. Consumers rebelled. Consumers don’t like too much change and WW has implemented a lot of it lately. If it ain’t broke, don’t fix it! We think that the name change and shift from weight loss to wellness hurt the firm big time. Wellness is a tough sell with consumers. It’s vague and hard to understand. It didn’t resonate with dieters in the company’s ads.

Management says that they have a lot of work to do. We agree. WW is doing a lot of things right, but we think they should “stick to their knitting” and focus on their strengths–i.e. being a weight loss provider, not a wellness provider. We’re also not so sure that Kate Hudson is the best brand ambassador. She’s nowhere near overweight and has rock hard abs. Do most women in their mid- to late 40s really identify with her as having a weight problem? Also, don’t underestimate the actions of competitors. You’re all competing for the same pie. And, what’s happening with the at-work employer-based programs market? No mention of any activity in this market segment.

Scroll to Top