Weight Watchers On The Search For New CEO
Weight Watchers (NYSE:WTW) chief executive James Chambers has announced that he will resign at the end of September. According to a statement from the company, he and the board of directors made a “joint decision” that he should leave after three years on the job. Chief Financial Officer Nicholas Hotchkin and directors Thilo Semmelbauer and Christopher Sobecki will temporarily lead Weight Watchers until a replacement for Chambers is hired. As part of the changes, Semmelbauer also has been elected to the board.
Following the announcement of Chambers’ resignation, shares fell as much as 9 percent in after-hours trading. Oprah Winfrey, who owns a significant stake in Weight Watchers, will help the diet company pick a new leader, the company said in an announcement. According to the statement, no one from inside the company was considered a candidate to replace Chambers.
Winfrey is the company’s second-biggest shareholder, as the investment firm of its chairman, Ray Debbane, owns nearly half of Weight Watchers’ stock. Nearly one year ago, Winfrey agreed to purchase a 10 percent stake in the diet company. The deal included options for an additional 5 percent. She also announced that she would follow its weight-loss program. The company plans to use Winfrey as part of its marketing campaign this winter season.
Shares rallied more than 100 percent when Winfrey announced she had invested in the company. Nearly $1 billion of market valuation has been erased at Weight Watchers since last fall. As of Monday’s close, the company’s stock price was down 55 percent for the year. Investors now value the company at a little more than $600 million.
In recent years, the company has struggled to compete with other weight-loss programs. The popularity of wearable fitness trackers, such as those made by Fitbit Inc., and calorie-counting apps on mobile phones have made it hard for Weight Watchers. A shift has also occurred in what U.S. consumers consider to be healthy. Shoppers are increasingly choosing natural foods over diet programs.
Chambers’ attempt to turn around the weight-loss company failed to gain traction. Chambers managed to boost subscriber rolls but disappointed investors with financial results. In the quarter ended July 2, revenues were little changed from a year earlier. Its most recent sales missed analysts’ estimates. The company’s revenue and net income have declined in every year since Chambers became CEO in 2013.
Weight Watchers aims to help people lose weight by using a point system to track calories. The company said in August that it’s now seen three quarters of member recruitment growth. New North American subscribers, a key measure for the company, grew 9 percent in the second quarter.