Oprah Winfrey/Twitter/Weight Watcher
- Weight Watchers reported second-quarter earnings that beat expectations Tuesday. It also raised its full year guidance for 2019.
- Shares soared more than 22% in early trading on the news.
- The company has been boosted by strong subscriber growth, helped by celebrity endorsements, new technology, and expansion in global markets.
- Watch Weight Watchers trade live on Markets Insider.
Shares of Weight Watchers soared more than 22% in early trading Wednesday after releasing earnings Tuesday that beat analyst expectations. The company also raised its full-year outlook.
Here’s what the company reported versus what analysts surveyed by Bloomberg expected:
- Earnings per share: 78 cents vs. 64 cents expected
- Revenue: $369 million vs. $376.1 million expected
Weight Watchers ended the second quarter with 4.6 million period subscribers, up 1.5% from the previous year and the highest level ever for a second quarter, according to a press release. That suggested that its efforts to enlist more celebrity spokespeople are panning out.
On an earnings call with analysts, CEO Mindy Grossman highlighted how the company is using existing and new celebrity partnerships to boost social media engagement and subscriber growth. Oprah Winfrey remains a main spokesperson, and new shout outs from Kate Hudson, Robbie Williams and DJ Khaled have boosted social media followers.
Following the results, the company is raising its earnings guidance for 2019 and expects earnings-per-share between $1.55 and $1.70, where analysts had expected $1.52 per share.
"We are focused on building momentum and look forward to launching our new program innovation later this year, which we believe will accelerate subscriber growth in 2020," Grossman said in a statement. "We are still early in our journey as a global holistic wellness company with the best-in-class weight management program, and we see tremendous opportunities ahead to drive growth in 2020 as well as over the long-term."
Subscriber growth has been a top priority for both the company and analysts that cover it. Shares of Weight Watchers jumped 10% in July when analysts at JP Morgan upgraded the stock to "neutral" from "underweight" and raised the price target to $22 on expectations that subscriber growth would continue and even be boosted by a new personalized diet program the company said it would release in 2020.
The jump in share price comes after Weight Watchers suffered a huge drop after fourth quarter 2018 earnings disappointed expectations and the company released a 2019 earnings-per-share guidance that was half of what was expected. Shares plunged 36%. While the company has had a few spikes in share price since, it’s still working to regain ground following that loss.
Weight Watchers is also developing its services to meet the expectations of today’s consumers. One addition, a partnership with Aaptiv, a physical activity tracker, has boosted the number of subscribers tracking their activity with Weight Watchers.
"We have found that members using Aaptiv by the WW app are tracking activity 30% to 45% more often than those not using Aaptiv. And we look forward to bringing more Aaptiv content to our members in the coming months," Grossman said.
The company is also focused on global expansion, targeting markets outside the US, including Germany, the United Kingdom, and Australia.
Weight Watchers was down 46% year-to-date through Tuesday.
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Source: Business Insider – feedback@businessinsider.com (Carmen Reinicke)