Shares Plunge as Weight Watchers Slims Down

Weight Watchers (NYSE:WTW) reported first-quarter profit that missed expectations as the weight-loss company increased its marketing spending. Weight Watchers shares plunged in after-hours trading on Wednesday following its report.

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The weight-loss company earned $54.6 million, of 74 cents per share, for the quarter that ended March 31. That figure is down from $73.6 million, or $1 per share, in the same quarter last year. Its total revenue was essentially flat at $503.5 million.

Analysts were expecting Weight Watchers to earn 78 cents per share on revenue of $505.8 million. They were also expecting the weight loss company to earn $4.10 per share, excluding one-time adjustments.

Weight Watchers revealed that it spent 36 percent more on marketing in this year’s quarter to help boost its Weight Watchers’ online business with men in the U.S. and European consumers. Even though in-person meetings have struggled, the company’s online business has proved successful. The company was also hoping to counter competition by Nestle’s Jenny Craig, Nutrisystem (NASDAQ:NTRI), and Medifast (NYSE:MED) by increasing its marketing expenses.

Weight Watchers has updated its full-year guidance to reflect a recent tender offer, share buyback, and changes in business trends. The company has released its expectations of earning $4.60 to $4.80 per share for the year, which is an increase from its previous forecast of $4.20 to $4.60 per share. The update also includes a 50 to 55 cent per-share impact from the offer and the buyback.

Weight Watches’ shares rose 33 cents to close at $76.01 Wednesday. However, shares fell $12.02, or nearly 16 percent, in after-hours trading to $63.99. The stock has traded between $51.28 and $86.97 in the past 52 weeks.

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