Blog: Why Weight Watchers has shed sales
Dean Best | 17 February 2014
Weight Watchers' current plight is symptomatic of two trends.
The US-based group saw its shares plunge more than 27% on Friday (14 February), the day after it posted a drop in 2013 profits and set 2014 earnings forecasts below Wall Street estimates. The fall in Weight Watchers was also just the latest drop; its share price was down by more than 35% in 2013.
How consumers are managing their weight is changing. There is, as analysts at UK industry watchers Leatherhead Food Research have noted, a growing interest in health and wellness more generally over, simply, diet.
"With consumers' personal memories of failed weight loss attempts and with the media delving into the science behind weight loss, diet is becoming a dirty word. Rather than compartmentalising healthy eating to a particular part of their lives, consumers are looking for more balanced approaches to weight loss and weight management," Emma Gubisch, strategic insights manager at Leatherhead, said recently, while outlining her trends to watch in 2014.
And Weight Watchers has also been squeezed by the rise of the Internet, enabling those interested in keeping their weight down to find alternative ways of staying trim. Free, online tools have lured consumers away from companies like Weight Watchers that offer paid-for meetings and subscriptions.
These trends have provided the context for Nestle's sale of the bulk of its own weight management business, Jenny Craig, in November, while there has been talk Unilever could sell Slim-Fast (although the company has declined to comment).
Notably, speaking to analysts on Thursday after Weight Watchers issued its full-year results, which were filed after the closing bell in New York, chairman and CEO Jim Chambers said the start of 2014 had been just as tough.
"The start of the year is proving to be every bit as challenging as we thought, if not more so. The headwinds from free apps and activity monitors have only continued to intensify and are significantly impacting consumers," Chambers said.
Weight Watchers has set in train plans to reduce costs, including lowering its marketing spend. Chambers, however, said the company is looking to "maximise our consumer activation", with re-shot ads, including one featuring US singer Jessica Simpson airing that will air in the US this week.
The Weight Watchers boss said the company also plans to focus on markets "with the highest near-term potential" and, for example, closed its business in China.
However, Chambers admitted Weight Watchers is "seeing softness across all of our large markets".
It faces a challenge in convincing consumers why they should, one, turn to their weight management products and, two, pay for them at all.
Singapore-based agribusiness giant Wilmar International is to publish more information on how it sources its palm oil, a move welcomed by environmentalists....
Just two weeks into 2015 and competition among UK grocers is heating up further. Will suppliers be caught in the crossfire? Corporate restructuring firm Begbies Traynor thinks so....
Boulder Brands is expanding its Udi's brand in the foodservice channel through a tie-up that will bring two varieties of gluten-free pizza to Pizza Hut outlets throughout the US....
- Premier Foods CEO expects UK supermarket rebound
- Briefing: The risks and rewards of e-tail in China
- Unilever must "speed" response to consumer trends
- Why US diet guidelines should consider environment
- Emerging markets online: India's food retail scene
- Post Holdings strikes deal to acquire MOM Brands
- Food industry news of week: Unilever, PepsiCo
- Chobani launches Tots infant range
- Premier Foods hails "improving" sales trends
- Monde Nissin "to acquire Menora"
- 10 Key Trends in Food, Health and Nutrition 2015
- The Sugar Backlash and its Effects on Global Consumer Markets
- The Future of Retailing in the UK to 2017
- Global Consumer Trend Framework: Understanding Attitudes and Behaviors that Influence Global Consumption Habits
- Unilever - Strategy and SWOT Report