Weight Watchers’ Oprah bounce fading fast as CEO departs
The Oprah Winfrey bounce is fading fast.
Shares of Weight Watchers International tumbled Tuesday after the abrupt resignation of chief executive officer Jim Chambers, renewing concerns about the company’s uneven comeback bid. The stock fell 6.56 per cent to close at $9.68, the lowest level since before Winfrey took an ownership stake in Weight Watchers.
Winfrey, a media magnate with far-reaching influence, triggered a rally in the shares last October when she got involved with the company. In addition to taking a stake and joining the board, she became the most visible face of the weight-loss program. Since then, she’s posted videos about her progress, helping attract others to Weight Watchers.
But the Oprah effect has only gone so far. Though Chambers managed to boost subscriber numbers in recent quarters, the company has disappointed investors with other financial results. Revenue and net income have declined in every year since Chambers became CEO in 2013. And now the board is seeking a new leader, with Winfrey’s help.
Weight Watchers will be run by a trio of executives after Chambers leaves the company on Sept. 30, according to a statement — finance chief Nicholas Hotchkin, board member Christopher Sobecki, and former chief operating officer Thilo Semmelbauer.
It remains to be seen how much Winfrey can help the company. Weight Watchers announced its deal with Winfrey on Oct. 19, saying she was buying a 10 per cent stake in the company and receiving options for an additional five per cent. The stock, which had been hammered by years of losing subscribers, more than doubled in a single day. It had closed at $6.79 the last trading day before the announcement.
But the rally has largely fizzled. So far this year, the shares have lost more than half their value.
Since joining the company, Winfrey has tweeted about her weight loss and released a video that featured a surprise appearance at a Weight Watchers member meeting in New York. The company also plans to use Winfrey as part of its marketing campaign this winter season, when potential customers start dieting because of New Year’s resolutions.
Weight Watchers has about $2 billion in debt. The company repaid a $144.3-million first-lien term loan in April, helping alleviate concerns about a default.