Oprah Winfrey partnership could be an expensive choice for Weight Watchers as shares plunge on massive loss and missed earnings forecasts
Weight Watchers stock has plummeted by over 27 per cent in after hours trading after the worldwide dieting organisation reported a loss of $11.3m (£8.1m) for the fourth quarter of 2015, compared with profit of $4.4m in the same period in 2014 – a 359 per cent drop in income.
This brought earnings per share (EPS) to a loss of $2.2, down from EPS of $5 this time last year. Revenue fell 20.9 per cent to $259.2m from $327.8m.
Analysts had been expecting earnings of two cents per share on revenue of $257.7m.
The figures are just the second set of earnings Weight Watchers has reported since media icon Oprah Winfrey made a substantial investment in the company last October, and the group attributed the quarterly loss in part to costs associated with Winfrey coming on board.
A restructuring of the company, which saw the introduction of a new weight loss programme, was also one of the reasons behind the loss, the firm said.
Winfrey became a board member and adviser to the group when she purchased a 10 per cent stake in the company's newly issued shares, as well as becoming a fully fledged Weight Watchers member, attending weekly meetings and sharing her experiences along the way.
"The partnership with Oprah Winfrey is off to a strong start,” Chambers added. “Our transformation momentum is building, with positive recruitments this winter season setting a solid foundation for revenue growth and increased profitability."