Weight Watchers scores an earnings 'home run' with its Freestyle program

  • Weight Watchers International reported a record subscription number of 4.6 million.
  • The company, which Oprah Winfrey bought a 10% stake in 2015, beat earnings and revenue estimates.
  • Weight Watcher’s new Freestyle program showed success and an analyst called it a “real home run” as it appealed to a broader audience, including men, with the help of celebrities like Kevin Smith, DJ Khaled, and Chef Eric Greenspan.
  • Watch Weight Watchers International trade here in real-time.

Weight Watchers International kicked off its fiscal year with solid first-quarter results and record-high membership. Shares soared more than 7% in the pre-market Friday.

The company, best known for its weight-loss programs endorsed by Oprah Winfrey, reported earnings of $US0.56 a share, beating analysts’ estimate of $US0.06. Revenue came in at $US408.3 million compared to analysts’ estimate of $US388.67 million as reported by Bloomberg. Subscriptions, which bring in 80% of revenue, rose 29% year-over-year to a record 4.6 million.

“In the first quarter of 2018, we delivered impressive revenue growth and continued margin expansion, doubling our operating income compared to the prior year quarter,” CFO Nick Hotchkin said in a press release. “Based on our strong performance and continued momentum, we expect our annual revenue to grow by almost 20% and have raised earnings guidance for 2018.”

Average membership retention rose to over nine months, the highest level in company history, a result fuelled by the Weight Watchers app. The company’s new Freestyle program has been called a “real home run” by Craig-Hallum Capital Group analyst Alex Joseph Fuhrman on the earnings call, and management said the flexible program appealed to a broader audience. Weight Watchers saw a 40% increase in member signups, and with the aid of celebrity spokesmen Kevin Smith, DJ Khaled and Chef Eric Greenspan the company saw greater interest from young dads.

“Our program Freestyle works unbelievable for men, it works for women,” CEO Mindy Grossman said in the earnings call. “It works across demographics.”

Weight Watchers International is up more than 54% this year.

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