Can Oprah reboot Weight Watchers? CEO Grossman is banking on it

Weight Watchers is hoping Oprah Winfrey, who has publicly shared her battle of the bulge for years, can be a new lifeline for the struggling health services brand.

Shares tumbled nearly 30 percent in extended trading on Tuesday after weak fourth-quarter results.

CEO Mindy Grossman attributed the brand’s weak start to 2019 to the company’s winter campaign, which “did not recruit as expected.” She added that Winfrey, a major investor and brand ambassador, will be heavily involved in its marketing campaigns this year.

“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, bringing to life a clear message on how WW is the program that works,” Grossman said in a statement. “Together with Oprah, we are also working on an initiative to galvanize and bring together communities through a series of digital and live experiences and events to accelerate WW’s impact and allow us to reach new and diverse audiences.”

Ticker Security Last Change Change %
WTW WILLIS TOWERS WATSON PLC 275.00 -0.92 -0.33%

Winfrey, who is self-made, purchased a 10 percent stake in the brand in 2015 and while she has sold off a big chunk of that stake, she still remains the company’s second largest shareholder with a 8.1 percent stake.  Her contract with WW expires in 2020. Her net worth, much of which came from her long running daytime talk show, is pegged at $2.5 billion per Forbes.

The lackluster winter campaign negatively impacted quarterly results and its 2019 forecast.  While the company’s adjusted earnings per share of 63 cents came in slightly ahead of Wall Street’s expectations, its fourth-quarter sales of $330 million missed Wall Street’s expectation of $347 million, according to Refinitiv data. Weight Watchers also provided full-year revenue guidance of roughly $1.4 billion and earnings per share of between $1.25 and $1.50, both of which fell far short of projections.

Long known as a dieting brand, Weight Watchers rebranded to “WW” last year and shifted its focus to overall health and wellness. The company posted strong results for most of 2018, fueled by a successful marketing campaign featuring DJ Khaled. However, shares have slumped more than 70 percent since the company’s second-quarter earnings report last August.

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Weight Watchers dismissed reports last December that Winfrey had pulled back her efforts at the company, with a spokesperson saying at the time that the media mogul “continues to be very involved.”