Weight Watchers (WTW) has trimmed down 27% year-to-date in 2013, and down 55% from its 2011 peak over $85 a share.
And Weight Watchers stock isn’t ever coming back. WTW has simply been disrupted out of the weight-loss game thanks to high-tech solutions including fitness apps for the Apple (AAPL) iPhone, the FuelBand from Nike (NKE) and sundry other calorie counting websites and gadgets.
The company certainly has a powerful brand, with Weight Watchers celebrating its 50th anniversary this year.
But WTW stock has been falling hard amid tough competition lately from competitors including Medifast (MED), NutriSystem (NTRI) and Herbalife (HLF) that saw the big opportunity in the big waistlines of America.
Weight Watchers has always been different than other fads and weight-loss schemes, from P90X to the Thighmaster, because it offers weekly meetings to chat with other folks about your weight loss struggles. The fees, then, are for the social element instead of some magical exercise product or scientifically optimized supplement to weed out high calorie foods.
But the connectivity of the internet and the mobile revolution are starting to blow up that model, since dieters can get support in many places. And thus, Weight Watchers is left without anything very compelling to win over dieters.
It’s CEO abruptly departed last week years to “pursue other opportunities,” its quarterly results missed big-time and full-year fiscal 2013 forecasts were revised down… this is not a company moving in the right direction, and technology is making a change of direction even harder.
Investors dumped shares in 2008 as sales tanked, since weight loss programs didn’t seem a prudent use of money for many households that were hard-hit by the Great Recession. Signs of a rebound fueled the stock in 2011 and 2012, but the bloom is now off the rose.
Technology has left WTW behind, and investors should leave the stock behind too.
- Weight Watchers earnings thinning out. (CNN Money)
- On the other hand, Jacob Steinberg wonders if WTW is oversold. (The Motley Fool)
- Internet killed the dieting star. (Wonk Blog via Washington Post)
- Oh and if you care, here’s what departed CEO David Kirchhoff does (did?) to stay fit. (CNBC via Yahoo! Finance)
Jeff Reeves is the editor of InvestorPlace.com and the author of The Frugal Investor’s Guide to Finding Great Stocks. Write him at firstname.lastname@example.org or follow him on Twitter via @JeffReevesIP. As of this writing, he did not own a position in any of the stocks named here.