Shortly after it was reported that WeightWatchers’ stock shares had tumbled 58% over the last one-month period, the company’s CEO, Sima Sistani, sent a memo to internal employees, noting that “turning around and totally transforming a business is not for the faint of heart.”
The stock freefall wasn’t an overnight development. In late February, in an announcement concurrent with WeightWatchers publishing their latest financial figures — which showed a net loss of over $88 million for the last three months of 2023 — longtime board member Oprah Winfrey revealed that she would not stand for reelection at the company’s next shareholder meeting in May, which prompted heavy selling.
In the memo, which was shared with CNBC last week, Sistani indicated that she wasn’t overly concerned about the numbers. “We believe the recent stock price moves do not reflect the strength of their performance, outlook or the near term trade-offs we’re making for our future growth,” she said. “As we shared in our recent earnings report, we have returned the company to a positive trajectory. In fact, we are on track to beat our Q1 guidance for Clinic subscribers.”
The “Clinic,” to which Sistani is referring, is the WeightWatchers Clinic, which is how the company has rebranded Sequence, a weight loss medication subscription service they acquired last year. The program will connect patients with providers who can prescribe GLP-1 medications like Ozempic and Wegovy.
For WeightWatchers, it is also both the key — and the primary complexity — in adapting their image for a new generation of customers, some of whom believe the company first needs to answer for how it has framed dieting in the past.
The particular difficulty of this dance was incredibly apparent at a recent day-long marketing event which Bloomberg characterized as a “brand misstep.” In February, WeightWatchers gathered a dozen social media influencers at a Los Angeles mansion (the “GLP-1 hype house”) to bake protein-packed muffins, pose for pictures with drag queen Kim Chi and take selfies with gigantic injector pen props. The purpose of the event, according to emails sent to potential partners that were reviewed by the publication, was to “help bust the misconceptions and stigma around GLP-1 medications” and “share that WW is here to support you.”
Even before the event took place, it managed to attract social media ire. The motivation for the backlash was largely two-fold, as Bloomberg’s Madison Muller reported; some weight loss and fitness influencers objected to the business deal built around the potential partnership itself, which included a pretty rigid non-compete clause. However, others have more personal reasons for distrusting WeightWatchers as they move into the weight loss medication space.
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“Many of those people had negative associations with the brand’s decades-long approach to food and dieting,” Muller wrote. “A few said WeightWatchers’ points system, which assigns number values to food for optimal nutritional intake, led to their own disordered eating.”
Ashley Dunham, an influencer with 85,000 followers on TikTok, turned down WeightWatchers’ offer to partner on this event in December. “All it did was make us cringe,” Dunham told Muller. “I understand trying to reinvent themselves, but I think that reinvention needs to start with an apology.”
The pull between WeightWatchers’ past model — which heavily emphasized lifestyle changes, without the aid of medication, as being the key to sustainable weight loss — and their current investment in GLP-1s is raising a flag among investors, too, who aren’t convinced that it will be the solution for the company’s problems.
“WW is in a tough spot,” said one analyst consulted by CNBC. “Sequence should be the future. That’s the GLP-1 playbook, but at this point it’s still very small. If they are talking about upside to that small business in and of itself, it’s not meaningful. The bigger issue is the legacy business continues to suffer and the company is overly levered.”
Regardless of how the company chooses to move forward, an element of their strategy will have to be in reducing stigma, both around being overweight and the expanding menu of sustainable weight loss methods. This is something Oprah Winfrey, who has revealed she uses weight loss medications as a “maintenance tool,” alluded to in a Feb. 28th statement regarding her departure from the company.
“I look forward to continuing to advise and collaborate with WeightWatchers and CEO Sima Sistani in elevating the conversation around recognizing obesity as a chronic condition, working to reduce stigma, and advocating for health equity,” Winfrey said. “Weight Health is a critically important topic and one that needs to be addressed at a broader scale. I plan to participate in a number of public forums and events where I will be a vocal advocate in advancing this conversation.”
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