Weight Watchers banked on the “Oprah Effect” after it signed the outspoken (and often controversial) media mogul last October, and things seemed to go well – for a while. However, USA Today reports that Weight Watchers’ stock plummeted last Friday:
Shares in Weight Watchers (WTW) went on a crash diet Friday, falling $4.54, or 29%, to close at $11.01 after the diet company said it expects a quarterly loss. And the biggest loser — at least in terms of individual shareholders — was Oprah Winfrey.
Winfrey, the entertainment superstar, saw her massive, nearly 6.4 million-share stake in Weight Watchers shrink by almost $29 million. But even Winfrey wasn’t hit as bad as an investment firm based in Belgium that was seeing losses piling up that exceed $125 million.
Weight Watchers has been troubled for a number of years, likely due to the proliferation of free and low-cost calorie counting app such as MyFitnessPal. It’s also questionable whether the Weight Watchers formula, which revolves around group support in the form of in-person meetings, resonates with busy modern consumers who live their lives online. Around the same time the company partnered with Oprah Winfrey, it completely revamped its diet plan. However, the rollout of the new plan – dubbed SmartPoints – was plagued with IT issues, as well as complaints from members that the new plan was too restrictive and reminiscent of the very fad diets that Weight Watchers has long railed against in its own marketing.
Weight Watchers claims that its plan is sustainable for a lifetime, but how sustainable is a diet plan that fundamentally changes every few years? And, with each change, members are forced to buy new materials. Weight Watchers and other diet plans may have been able to get away with that pre-Internet, but today’s digital consumers are more educated about their options – and perhaps more likely to turn to a calorie-counting site that is free of charge and never changes.
Because of all of this, it doesn’t surprise me that the “Oprah Effect” appears to have been temporary. Oprah came on board near the end of the year – the time when throngs of people make “New Year’s resolutions” that they almost never keep long-term. My prediction is that, ultimately, Weight Watchers will scrap its diet plans and focus on branded products. That’s where they have a chance of effectively competing. Everyone and their brother offers a free calorie-counting app, but nobody is giving away free food, free scales, or free fitness wearables.