WW International Inc., the diet company formerly known as Weight Watchers, is turning to Oprah Winfrey – again – to try to boost business after a sluggish year.
The stock tumbled in February after WW said it enrolled fewer subscribers heading into 2019 than it had expected amid a re-branding campaign that fell flat and failed to attract new customers during the crucial winter season. The stock continued to trade well below previous highs until August when it began to rebound.
Now, WW has upped the ante. That largely means banking on Winfrey, who owns 8% of the company, the second-largest stake. Beginning on Jan. 4, she will travel to several cities to host a wellness-focused arena tour, accompanied by various celebrities including Michelle Obama and Dwayne “The Rock” Johnson.
WW will also launch a marketing campaign on Dec. 26, centered around its new myWW program, which offers members a customized approach to weight management, according to Chief Executive Officer Mindy Grossman.
“Last January we were launching a new brand, telling the story of the brand, modernizing,” she said in an interview with Bloomberg. “That element of the campaign resonated. Where we fell short was on the harder recruitment side of the campaign.”
Investors are happy to see Winfrey heavily involved again -- the stock jumped 3% Monday after she said she would remain on the company’s board and continue her work as an adviser through 2025 -- but many analysts have taken a wait-and-see approach.
Keybanc analyst Ed Yruma said much will depend on how Winfrey and the added consumer choices help to drive consumers to WW once the peak season starts. Yruma is among the nine analysts with the equivalent of a hold rating on the stock, while three recommend buying it, according to data compiled by Bloomberg.
The new myWW program should keep current customers happier, said R.J. Hottovy, an analyst at Morningstar, but “I’m not sure how much it’s going to bring in new members.”
Winfrey joined the company as a board member and adviser in October 2015. Her presence helped to propel its market value from $400 million to almost $2.8 billion currently. That’s down from a peak of $6.8 billion in June 2018.
Long-term investors might ponder if WW is too reliant on Winfrey. If she were to step away from the company in the future, its marketing would likely take a hit, Hottovy said. But for now, he sees the stock as fairly valued with positive catalysts heading into 2020.
“By all indications I think they learned from last year’s weaker marketing campaign so I think that we’ll see a stronger start to 2020 than we did 2019,” Hottovy said.
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