Weight Watchers Posts Strong Fourth Quarter, Drops on Earnings Guidance

Weight Watchers

is down big on Thursday on word of lower-than-expected guidance for 2013. The New York City-based weight management firm posted an EPS of $1.03, easily topping Wall Street expectations of $0.87. This figure exceeded the company's Q4 2011 performance by 1.7 percent, as well. On the revenue front, Weight Watchers also had a successful quarter. Revenues were 17.6 percent higher than the same period in 2011. The company posted fourth quarter revenues of $407.9 million, topping analysts' expectations by over $10 million. For the year, EPS closed out at $4.23, beating out analysts' hopes of $4.08. Revenues for the year finished at around $1.83 billion, edging by the firm's 2011 performance of $1.82 billion. This figure also narrowly slipped by Wall Street expectations of $1.82 billion.

The company generated less income at its physical locations in North America and the U.K. than during the same period in 2011. Of particular note was a significant decline in paid weeks on both fronts and an even larger decline in attendance, suggesting the firm's brick-and-mortar operations are declining in popularity on both sides of the pond. Weight Watchers' revenues in North America finished at $175.1 million in the fourth quarter, down nearly two percent year-over-year. Paid weeks were down around 7.5 percent and attendance was down 14 percent. Meanwhile, UK revenues dropped around nine percent for the quarter, finishing at $31.8 million. Paid weeks declined nearly 18 percent and attendance dropped around 23 percent.

On a positive note, Weight Watchers grew in Central Europe. The firm's revenues grew well over three percent year-over-year in this region, finishing at $39.8 million. Paid weeks were up 11 percent and attendance remained flat.

WeightWatchers.com had a healthy performance during the fourth quarter, up 17.6 percent year-over-year. The site finished the quarter with 1.87 million subscribers - an 18 percent increase compared to fourth quarter 2011.

Analysts were hoping for a full year EPS of $4.75 in 2013. However, Weight Watchers' guidance suggests a far lower result. The company expects earnings to close out at $3.50 to $4 per share during 2013. If correct, the firm will finish 16 to 26 percent below expectations. As a result, Weight Watchers' stock has lost a lot of weight on Thursday. After hovering in the low-to-mid $50s over the past three weeks, the stock now sits in the mid-$40s. It is presently at its lowest point in the past six months. Weight Watchers is down nearly 16 percent on Thursday.