Market Overview

Weight Watchers Needs A Business Plan, Not A Celebrity 'Front Woman'

Weight Watchers Needs A Business Plan, Not A Celebrity 'Front Woman'

If Weight Watchers International, Inc. (NYSE: WTW)'s strategy moving forward is simply finding a new CEO and banking on the popularity of its "front woman" Oprah Winfrey, then the company may be in trouble.

According to Bloomberg Gadfly's Shelly Banjo, Weight Watchers' search for a CEO to replace Jim Chambers, who resigned Monday, should focus on finding an executive who can bring a business plan that is adapted to the "changing tastes of a new generation of health-conscious consumers."

Related Link: Weight Watchers: The Oprah Effect Is Losing Its Luster

Billionaire media mogul Winfrey bought a 10-percent stake in Weight Watchers last October and was given a seat on its board of directors. Her involvement helped boost the company's stock from less than $7 to more than $26.

However, shares began tumbling in the following weeks and month and are currently sitting below $10 a share. In fact, short interest as a percentage of free float in March was the highest ever at 52 percent. Banjo suggested this is due to a consensus among investors that Weight Watchers' products failed to live up to its "Oprah-backed marketing promises."

What Happened?

Weight Watchers' demise, as evidenced by the absence of positive quarterly revenue growth over the past three years, comes at a time when consumers are craving fitness-related apparel and tracking devices as well as healthier eating options.

Weight Watchers used to rely heavily on offering a sense of community and accountability, but now individuals looking to shed some weight can find the same support on various social media networks.

Banjo added that Weight Watchers is also trying to be "everything to everyone" by offering in-person and online meetings, mobile apps, personal coaching and branded food.

Nevertheless, the weight loss industry is substantial at $60 billion so the company faces a huge opportunity ahead of itself. The only problem is whether the company will find the right leader who can deliver a solid business plan.

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