Shares of Weight Watchers fell in early August after the company reported a decline in subscribers since the previous quarter, down to 2.5 million from 2.6 million. However, shares picked back up at the end of August, thanks to Oppenheimer analyst Brian Nagel, who gave it an Outperform rating.
"Under the leadership of new CEO Mindy Grossman and her team,” Nagel said in a statement, “Weight Watchers is now tactfully introducing improved programming upon an enhanced digital infrastructure, so as to better connect with a larger and more diverse audience of subscribers," he wrote. "For investors, the new Weight Watchers strategy suggests the potential for a sustained, stronger and higher margin growth trajectory."
Weight Watchers is enhancing its technology to appeal to more customers, offering cloud-based mobile services and putting money into digital advertising rather than TV ads. Grossman said that the company’s mobile engagement had grown in recent years, so it makes sense for the company to shift focus to this platform.
Grossman is also rebranding Weight Watchers as a wellness company. She pointed out that more people are using the app features like barcode scanning and syncing their fitness devices to get the most out of their subscriptions.
Grossman noted on a call with investors: “As we have said previously, our aspiration is for the Weight Watchers app to become the world’s everything app for wellness. All of our 4.5 million subscribers have full access to our highly rated WW app, providing tools, content, connection, and inspiration anytime, anywhere. And we will continue to add content and features such as Invite a Friend, to make our app even more engaging and rewarding.”
Weight Watchers shares have grown substantially year over year as well, by over 175 percent. And since Oprah Winfrey joined as spokesperson in 2015, shares have risen more than 1,100 percent. The diet company’s rebrand essentially started with Winfrey coming on board as a spokesperson, offering a new appeal to the decades-old diet brand. Other celebrities have followed to become spokespersons as well, including DJ Khaled and Kevin Smith.
Weight Watchers has shaken up their traditional point system so customers don’t feel so restricted in their diets, appealing to new users who want more flexibility in meal planning. The company will also be offering its own meal kits, competing with players like blue Apron.
The new cloud-based infrastructure also enables the company to enter new markets and provide more robust services on its app, including engagement with other community members and fitness instructors.