Weight Watchers International, Inc. WTW shares were trading lower by more than 4 percent early Tuesday after the company's earnings report showed a slowdown in subscriber growth.
What Happened
Weight Watchers' second-quarter earnings report did show an 18-percent rise in revenue from a year ago, while gross margins expanded 430 basis points, Weight Watchers CEO Mindy Grossman told CNBC. Subscriber growth in the quarter was 27.6 percent, which does mark a deceleration from the 28.6-percent growth seen in the prior quarter. When adjusted for seasonal issues, Weight Watchers' subscriber growth is "essentially unchanged," the CEO said.
Why It's Important
During the quarter, Weight Watchers expanded its marketing reach to target a younger audience and men, Grossman said. The company collaborated with DJ Khalid, Kevin Smith and Chef Eric Greenspan; Grossman said such moves are vital for Weight Watchers to grow.
The company launched a new app feature where users can invite a friend, Grossman said. The weight loss brand reported a 70-percent conversion rate from the feature, and Grossman said it wasn't heavily marketed.
What's Next
Weight Watchers plans to change its marketing strategy for the fall season, as it will shift video advertisements away from linear TV, Grossman said. Instead, the company will run video ads as short as 6 seconds across social media platforms.
Related Links:
Weight Watchers CEO Discusses Relevance In The Era Of Apps And Wearables
KeyBanc: Weight Watchers Set For 20% Subscription, EBIT Growth
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