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Weight Watchers rallies on news that Oprah Winfrey lost 40 pounds

Bloomberg logoBloomberg 12/22/2016 Craig Giammona
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Weight Watchers International Inc.’s stock got another boost from the falling weight of Oprah Winfrey, the company’s backer and most famous customer.

The shares climbed as much as 14 percent after Winfrey announced that she’d lost 40 pounds using the program. The diet company, whose shares had fallen 54 percent this year before Thursday’s surge, is unveiling new TV ads featuring Winfrey that tout her weight loss. The media magnate and talk-show veteran became a centerpiece of Weight Watcher’s comeback plan last year when she bought a stake in the company and joined the board.

In October 2015, when Weight Watchers first announced its deal with Winfrey, the shares more than doubled in a single day. Though the previous rally has faded, Winfrey’s subsequent endorsements of Weight Watchers have given the stock temporary jolts. The shares gained 27 percent over two days last December when Oprah tweeted a video about using the weight-loss program, and there was a 20 percent bump in January after Winfrey said she had lost 26 pounds while still eating bread every day.

The latest marketing push begins next week, just before the New Year’s holiday. The coming weeks are critical for Weight Watchers: The company typically adds about 40 percent of new customers in the first quarter, when resolutions push people to seek out diets.

The stock climbed as high as $12 on Thursday, its biggest intraday gain Since Nov. 4.

Heavy Competition

Weight Watchers has been hit hard by the rise of free fitness apps, and a move away from strict calorie counting among dieters. But Winfrey’s wide-ranging influence has brought new life to the brand. Weight Watchers has added subscribers for three straight quarters after years of declines.

The New York-based company hopes that Winfrey’s new ads, which emphasize that she still enjoys pasta and tacos, will convince dieters that its updated program is an effective weight-loss tool.

“It’s vitally important that Oprah is living the program and articulating it in a way that’s authentic,” said Maurice Herrera, the head of marketing at Weight Watchers. “It really connects with prospective members.”

Despite the subscriber gains, it’s been a rocky year for Weight Watchers. The company has billions in debt, and its stock is heavily shorted. In September, Chief Executive Officer Jim Chambers announced he was leaving after about three years at the helm. That sent the shares plummeting to their lowest level in nearly a year.

Interim CEO

Chambers had been working to turn around the company, an effort that included revamping its nutrition program and adding a social-networking component to its app. Now, Weight Watchers is being run by a trio of executives who constitute the “interim office of the CEO.”

The ads rolling out next week show Winfrey doing yoga and cooking pasta. As consumers have changed their perception of wellness, Weight Watchers has pivoted to emphasize that weight loss and indulgence aren’t necessarily mutually exclusive. Winfrey will hammer that message home, Herrera said.

“People want to know what’s on her mind and how she’s living her life,” he said. “This will definitely get people’s attention.”


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