By CultureBanx Team
WW revised its 2019 revenue forecast down to $1.4B
Oprah owns around 8% of WW, a stake once worth $500M
Stock in WW (WTW +8.45%), the company formerly known as Weight Watchers slid more than 30% after they reported dismal Q1 earnings results. WW’s premier spokesperson and investor Oprah Winfrey has helped many companies reach stratospheric levels, but saving a failing weight loss brand may prove to be “weigh” more challenging. After a failed rebrand can the media mogul help WW level up with investors?
Why This Matters: Remember when Oprah told the world “I love bread!” in a Weight Watchers commercial as a way to attract more customers to their program. However, the problem with this is that folks are less interested in old fashioned carbs, and diets like paleo along with keto are currently en-vogue with health conscious audiences. This is why WW’s quarterly sales came in at $330 million, well below analyst estimates of $347 million. The company also had to revise its 2019 revenue forecast from $1.66 billion down to $1.4 billion.
In 2015, Winfrey bought an estimated 10% stake, over six million shares in the weight loss company. Her investment helped raise their shares more than 1,000%, according to CNBC. After selling some of her stock in March of 2018, she still owns around 8% of the company, a stake once worth $500 million that’s lost 80% of its value. When WW’s stock took its latest cliff jump she lost $48 million, that’s enough money to put almost anyone on a diet.
Furthermore, it’s not just WW that has its fingers crossed in hopes of America’s favorite pitchwoman to save their brand, Kraft Heinz (KHC -2.38%) also wants in on the action. Oprah started selling one of the country’s favorite food indulgences, frozen pizza under her “O That’s Good!” label in conjunction with Kraft Heinz. The company wants to boost investor confidence in the company’s food offerings since shares have been on a downward spiral, falling more than 50% in the past year.
Situational Awareness: Last summer Oprah announced her investment of an undisclosed amount into the Phoenix-based chain restaurant, True Food Kitchen. Based on the outstanding return WW initially received from her investment, True Food Kitchen expects their business to double by 2021. The popular eatery plans to utilize Winfrey’s insights and collaborate with her to help build the business. This is different than WW’s approach of only assigning her the role of a spokesperson.
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