Weight Watchers Sheds Earnings

Shares of Weight Watchers have plummeted 70 percent in advance of the company’s Q4 earnings report. Analysts expect the stock to continue to decline, which doesn’t bode well for the changes it has undergone in the last couple of years.

Brand ambassador Oprah Winfrey’s stock most definitely took a plunge according to reports, losing about $560 million.

JPMorgan Chase downgraded the stock first in January and then again in February after some analytics showed that WW daily active users had plunged a whopping thirty-five percent through February 15th. Subscriber numbers were disappointing as well. While third-quarter memberships rose 25 percent from the year before, they only hit 4.2 million, lower than the 4.5 million members the company reported in the second quarter.

Weight Watchers, or WW now, has rebranded itself as a wellness company in efforts to move away from the restrictive “diet” label. They have offered many new options to customers, including a new more flexible points system and an app that allows them to check in online instead of attending in-person meetings regarding their progress.

Customers however have complained about the new WW app and more have reported technical issues, especially since the beginning of 2019. Moving its platform online doesn’t seem to have helped the company as they are now competing with so many fitness tracker apps. If someone can get an Apple Watch and download a diet app, then what is the future need for a company like WW? This might explain the decision to rebrand in order to capture more of the wellness market.

MotleyFool points out however that “wellness” is an ambiguous concept, and many customers might be perplexed as to what exactly WW is – a weight loss company or something more vague? If there is confusion, customers might not understand the value of what they are getting.

Case in point was the controversy with WW’s newly appointed brand ambassador, actress and Fabletics co-founder Kate Hudson. When the partnership was announced, Hudson had to go on the defensive about her decision, clarifying that she wasn’t needing to lose weight but that she believes in WW’s commitment to overall wellness. But this was hurtful and confusing to customers who were on the app to lose weight.

Winfrey has recently distanced herself from the brand, though she still owns a stake in the company.

Weight Watchers is scheduled to release its fourth quarter earnings on Tuesday February 26th.