The 'Oprah Effect' can't fix Weight Watchers' biggest problems --  and shares are tanking

Weight Watchers shares are crashing after the company announced CEO James Chambers is resigning. 

Shares fell as much as 8% in after-hours training on the news, which comes at an uncertain time for the brand. Weight Watchers will commence a search for a new CEO. 

One year ago, investors scurried to buy Weight Watchers shares after Oprah bought a 10% stake in the company and said she would join its board.

But investors were overlooking some of the company’s biggest problems. Weight Watchers, whose diet program has a questionable long-term track record, faces competition from free apps and changing attitudes toward wellness that will have more people turning to alternatives.

And now, it appears the so-called “Oprah effect” is fading. Results have been hit-or-miss, with Weight Watchers reporting some declines in memberships. Shares have fallen 61% since the announcement that Oprah would be joining the board. 

“Weight Watchers has some significant business challenges that will not be solved alone — by even the most resolute celebrity,” University of Southern California marketing professor Jeetendr Sehdev said to Business Insider last year after Oprah took a stake.


Top of the list of its challenges is that the program is ineffective, according to a Duke University study, which claimed that Weight Watchers members spend an average of $377 a year on its services and products — for an average weight loss of 5 pounds. (There are, of course, anomalies — Tech Insider’s Molly Mulshine lost 10 pounds and claimed it was the only diet that ever worked for her.)

But even if they’re willing to give it a try, people have options outside of Weight Watchers that are significantly cheaper. Apps like MyFitnessPal and iTrackBites each simulate an experience similar to that of Weight Watchers. Why pay for minimal results when you can pay less — or not at all?

Further, doctors do not condone its focus on “points” versus nutrition. “Weight Watchers’ guidelines for healthy eating are simply unhealthy,” Dr. Joel Furhman wrote in a blog post, “and not supported by the most updated nutritional science.”

Weight Watchers will likely have to make major changes to the program if it wants to grow business. 

Mallory Schlossberg contributed to this story. 

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