Weight Watchers Keeps Gaining (Because, Well, Oprah)

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Credit: Oprah brings the Oprah touch.

Weight Watchers International Inc., reported big gains on Thursday–revenue rose 10.3% to $341.7 million, while profit soared 48.1% to $45.2 million—the first quarter of results announced since its newly appointed CEO, Mindy Grossman, joined the company.

Grossman praised the work done before she joined last month, work that included, of course, marketing that features board member and investor Oprah Winfrey.

"There's no doubt that the Weight Watchers long-term collaboration with Oprah Winfrey has certainly accelerated the company's progress," Grossman said during the company's quarterly call.

Other strategies, including moving beyond a strict weight-loss focus into a broader well-being strategy, are helping the company overcome challenges, from the proliferation of diet apps to wearable fitness trackers.

"It's not just about weight loss, but about leading a happier and healthier lifestyle," Grossman said.

Grossman, who began her tenure as CEO last month after a nine-year run as CEO of HSN, said seemingly everyone has their own Weight Watchers success story or knows someone who has had a positive connection to the brand. As the Wall Street Journal pointed out, Grossman herself connected with the brand when she lost 10 pounds while following the program as a 14-year-old.

The number of subscribers at the end of the second quarter jumped 20.1% to 3.5 million. Weight Watchers added subscribers in both meetings and online plans and said it is seeing some marginal improvements in retention—aka, people are starting to stay on the plans a bit longer. And Weight Watchers raised its 2017 profit forecast, calling for earnings of $1.57 to $1.67 per share, up from a prior forecast of $1.40 to $1.50. The results and the company's confidence helped push the stock up 15% in after-hours trading.

And the company's qualitative research shows that the brand was resonating more as a modern, comfortable brand in early 2017 than it was two years earlier when respondents viewed it as warm and traditional "but outdated," Grossman said.

Weight Watchers now plans to spend about $205 million on marketing this year, up slightly from its prior expectations, as it invests more in digital marketing, which has been a success. Marketing spending as a percentage of sales will be down from a year earlier, as the company tries to be savvier about how and where it advertises. Its spending has declined in the changing ad landscape. Back in 2012, Weight Watchers allocated about $350 million to marketing.

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