Diet companies come and go depending on the latest fad, but Weight Watchers is a weight loss industry giant, and continues to evolve with its customers’ needs as it has since its founding in the 1960’s. In recent years however, the company has made some bold moves to stay relevant, such as hiring Oprah Winfrey as a spokesperson and restructuring corporate management. The question on the minds of many Weight Watchers investors is: will these moves help boost memberships and give the company a fresh image?
Weight Watchers released its much-anticipated fourth quarter and full year 2016 fiscal report, and it looks like the moves are paying off with membership and revenues growing.
According to the fiscal report, memberships in the last quarter of 2016 were up 10.1% versus the prior year period. Q4 2016 Meetings “paid week” memberships increased 9.6%, and online paid weeks increased 10.5%. These gains were led by growth in North America where Total Paid Weeks (meetings and online) grew 13.2% in Q4 2016. Total paid weeks for 2016 (Jan-Dec) were up 5.5% vs. the previous year.
Weight Watchers offers meetings where people participating in the plan can attend and receive in-person support (in franchise locations), or join online programs that offer more convenience. There are both recurring (subscription) members as well as pay-as-you-go members who pay per meeting or individual service.
In the fiscal report, “paid membership” is broken down in several ways. "Meetings" refers to monthly commitment plan subscribers, "pay-as-you-go" members, Total Access subscribers and other Weight Watchers in-person meetings members. "Online membership" refers to Weight Watchers Online and other digital subscription products. "Subscribers" refers to meetings members and online subscribers who participate in recurring billing programs, such as Weight Watchers’ monthly commitment plans.
Revenues for the company were $267.4 million in Q4 2016, with an increase of 5% against the fourth quarter of 2015. Service revenues in Q4 2016 were $221.2 million, while product sales made up $46.2 million of total revenue. The increase was driven by revenue growth in North America, and offset by declining sales in international markets.
Total revenues for 2016 (Jan-Dec) were $1,164.9 million, with an increase of 1.4% versus the prior year.
The company’s operating income totaled $200.8 million in 2016, increasing 6.3% versus the prior year, after excluding one-time expenses associated with the partnership with Winfrey as well as restructuring charges in 2015.
"We delivered positive member recruitment growth in every quarter of 2016, ending the year with 10% more subscribers than the prior year," Nick Hotchkin, the Company's CFO and Member, Interim Office of the CEO, said in a statement. "So far in 2017 our global marketing campaigns are driving strong member recruitment and interest in our Beyond the Scale program. With the year off to a good start, we are confident we will deliver revenue growth and higher profitability throughout the year."