Global weight loss brand Weight Watchers’ shares dropped by 19 percent in trading on Friday as the company lowered its earnings expectations. The company, which is one of the largest weight loss brands in the world, claims that it is rapidly losing out to online applications designed to help users lose weight.
Weight Watchers has been operating for over 50 years, and the company’s simple weight loss system, which uses points to track the value of certain foods, has grown into a fitness industry staple. However, a surge in the amount of people using free mobile apps to track their weight loss is hurting the company’s bottom line.
Executives announced that Weight Watchers will likely attract fewer members in the next year as more people tackle dieting on their own. The company also cut its annual profit estimates on Thursday. The announcement resulted in a 19 percent decline in Weight Watchers’ share price as investors panicked in Friday trading.
The decline in Weight Watchers’ share price is also due to the departure of chief executive David Kirchoff. The company will be headed by new CEO Jim Chambers, who claims that the business conditions the company faces were ‘challenging’ but that the company had been successful in reducing its costs to face new earnings.
Weight Watchers’ unique selling point has been its point system and large support network, which gives members a degree of accountability that many other weight loss programmes are missing. Many of these qualities have been replicated by apps, which use online social networks to encourage members to lose weight efficiently.
Analysts claim that Weight Watchers has limited long-term planning and that the company offers very little evidence to assume that its recruitment will improve in the future. The company was founded over 50 years ago and claims to have over a million active members, although membership decreased in 2012.
