Weight Watchers CEO: How Oprah and the 'Quarantine 15' boosted subscriptions

WW is focusing on digital health and wellness programs during COVID-19

With gyms still closed in many parts of the country, WW is putting more weight behind digital streaming.

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The company, formerly known as Weight Watchers, reported lower-than-expected second-quarter profit and revenue because the coronavirus pandemic shut down its brick-and-mortar locations for in-person meetings. But the weight-loss and fitness brand has bulked up on digital subscribers, perhaps because work-from-home mandates and gym shutdowns have resulted in the unwanted "Quarantine 15" for many, a reference to the amount of weight gained during lockdown.

WW

“When COVID really escalated, in six days we moved all of our workshops virtually,” WW CEO Mindy Grossman told FOX Business. “There’s no doubt our digital transformation has accelerated.  We see the future of the business — certainly, we will still have studios — but it’s really going to be driven by digital member growth.”

The New York-based company reported a net income of $14 million in its second-quarter earnings report on Tuesday, compared with $54 million in the same period a year ago. Sales also dropped to $334 million from $369 million one year ago. However, WW closed out the quarter with its highest-ever subscriber rate of 5 million people, up 9% year-over-year.

Much of the growth has been driven by digital assets outside of just food and exercise, with newly implemented features such as a water tracker to monitor hydration levels and a sleep tracker to sync with smartphones.

OPRAH TOUR DRIVING WEIGHT WATCHERS MEMBERSHIPS 

The brand started pivoting to more of a wellness company before the pandemic hit. Earlier in the year, WW presented Oprah's 2020 Vision Tour, during which Oprah Winfrey interviewed the likes of Michelle Obama and Jennifer Lopez about topics ranging from food, exercise, and diet, but also mental and physical health. The company grew its subscriber total by 8 percent, closing out the 2019 fiscal year with 4.2 million subscribers — an all-time, year-end high for the brand.

The live tour also boosted the brand's bottom line with direct tour revenue estimated at close to $15 million, MarketWatch reported.

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IS IT SAFE TO GO TO THE GYM DURING THE CORONAVIRUS PANDEMIC?

Having the star power of Winfrey — who owns 8% of the company’s shares, according to FactSet — has also helped it attract a younger demographic, Grossman says, adding that more than half of members (51%) who joined WW in the second quarter were under 45.

“We’re definitely seeing a new cohort coming in. There is a real shift in consumer behavior of ‘I really need to take care of myself.’ COVID has really had an impact. People want a trusted brand," Grossman said.

Incorporating experiential lifestyle content into weight loss and healthy living programs is a way for WW to continue to infiltrate the wellness market. Indeed, the global wellness industry grew 12.8 percent during the last two years, from a $3.7 trillion market in 2015 to $4.2 trillion in 2017, according to the 2018 Global Wellness Economy Monitor. And with fitness companies like Peloton competing in the streaming wars, Grossman says WW will continue to carve out more content in the fitness space.

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“One of the things you’re going to see launching at the end of the year is a new membership vertical around coach-led communities built on content produced by the [team behind] the physical tour and the virtual tour with Oprah. You’re going to be seeing a lot more of that.”