Tags: Weight Watchers | diet | stock | rebrand

Weight Watchers Tumbles as Rebranding Fails to Wow Investors

Saturday, 03 January 2015 08:31 AM

Weight Watchers International Inc.’s rebranding effort, including a redesigned magazine that rolled out this week, isn’t impressing investors.

Even as New Year’s resolutions promise to bring a wave of customers seeking to shed pounds, the shares tumbled 13 percent to $21.53 in New York, following an 8.6 percent four-day slide. Friday’s decline comes after volume in bearish put options climbed to 5 times the 20-day average on Dec. 31.

The stock drop underscores concerns that Weight Watchers won’t be able to pull out of a slump, after falling at least 25 percent in each of the past two years. The company, founded in 1963, has struggled to compete with new weight-loss apps and services, contributing to seven straight quarters of declining sales. Revenue is expected to drop an additional 4.2 percent this year, according to analysts’ estimates compiled by Bloomberg.

“Someone had been making some prescient purchases of January puts earlier this week,” said Jim Strugger, derivatives strategist at MKM Holdings LLC in Stamford, Connecticut. “The sharp move in the shares over the last week is a bit of a mystery.”

More than 4,000 bearish options changed hands on Dec. 31, compared with the average of 769 puts over the previous 20 days and about 1,200 calls, according to data compiled by Bloomberg. Puts with an exercise price of $24 and $25 expiring by Jan. 17 traded the most that day.

The stock was among the most heavily shorted last month, with more than a third of its outstanding shares borrowed and sold short in hopes of a decline.

Weight Watchers has been working to update its image with new advertising and the redesigned magazine, which debuted Thursday. The publication now emphasizes “beautifully prepared but not-so-perfect foods.”

Stephanie Schulman, a spokeswoman for the New York-based company, didn’t respond to a request for comment.

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Weight Watchers International's rebranding effort, including a redesigned magazine that rolled out this week, isn't impressing investors.
Weight Watchers, diet, stock, rebrand
Saturday, 03 January 2015 08:31 AM
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