What Weight Watchers' Bleak Outlook for 2019 Signals About the Old-School Diet Brand's Future

WW—the brand formerly known as Weight Watchers—is off to a rough start in 2019. The company's shares tumbled as much as 36 percent after WW reported poor fourth quarter results and shared on its recent earnings call that, due to a "soft start to the key winter season," the brand expects low recruitment levels and a decline in revenue and earnings for 2019. "After an outstanding year for WW in 2018, our start to 2019 and winter recruitment performance has been very disappointing," Mindy Grossman, CEO of WW International, noted on the call. The brand shared that in 2019, it expects to generate $1.4 billion in revenue, which falls well below the $1.66 billion expected from the company. This comes less than six months after a massive brand overhaul. Last September, the brand dropped its existing Weight Watchers name in favor of WW and launched a fresh brand identity, including a new logo and tagline, "Wellness That Works." In keeping with a consumer shift toward healthier lifestyles, the brand also worked to reposition itself as a health-and-wellness brand rather than a diet company. But it would appear that, after six months, the brand repositioning isn't quite working out the way WW might have hoped. So what does this mean for the future of the WW brand? Some experts suggest that while the repositioning made sense, especially for a company looking to target a younger demographic, WW may have pivoted a bit too far away from its core offerings (mainly, helping people to diet and lose weight). Mike Stevens, GYK Antler executive director, strategic planning and account services, argued that the move into wellness has not only led to the brand "losing their identity with their core consumers," but also that the new identity doesn't seem to be resonating with new customers. "Their new shortened name, WW—which the company has said doesn’t stand for Weight Watchers, nor does it stand for Wellness that Works, and is rather 'just a marque'—leaves consumers confused, as it’s not an identifiable brand mark or logo," added Stevens. Others suggest that, after just six months, the rebrand hasn't been in the marketplace long enough to show its true capability. The brand, they said, is still undergoing a massive transformation, and it may take time for WW to see real results. "It doesn’t surprise me that a rebrand that took place in October isn’t paying off right away," explained Mimi Chakravorti, executive director, strategy at Landor. "Weight Watchers has to make a huge shift in consumer perceptions, and I think what we are seeing [is that] it’s still the perceptions and the legacy that exists with the brand." [kickout id="1"] Yard NYC co-founder and CEO Ruth Bernstein agreed, noting that while a rebrand, name change and new wellness-focused tagline was smart, "rebrands take time. It's not enough to just change the name, there has to be an authentic holistic transformation of a company inside and out." Founded in 1963 out of Queens, New York, Weight Watchers began as a 10-week program designed to help subscribers shed excess weight using a point system, making it easier to track how much they were eating and encourage a healthier lifestyle. As with many other competitors in the diet space, Weight Watchers ran marketing campaigns with dramatic before-and-after photos of those who had found success using the program. Eventually, the brand tapped celebrities to promote the brand, including Jenny McCarthy, Jennifer Hudson, Jessica Simpson and, more recently, Oprah Winfrey. "For years, dieting focused on how you look. The Weight Watchers brand was a part of this, especially with the dramatic before-and-after shots," Chakravorti said. "Now, wellness is focused on how you feel. Therefore WW needs to illustrate that their program makes you feel better ... that's a harder thing to illustrate quickly in an ad campaign for a brand that's been so reliant on advertising." [kickout id="2"] Oprah will continue to be a major face for the brand in the U.S., Canada and Australia in the coming months, according to Grossman. The former talk show host currently has 5.4 million Weight Watchers shares and reportedly lost at least $48 million following the company's earnings report. Analysts agree that using Oprah is a smart move for the brand moving forward simply because she herself is such an iconic brand. That said, WW can't rely on her—especially if it's hoping to appeal to a younger demographic. "If Oprah comes through, and it’s all about being balanced, and she feels great, I think that could work," Chakravorti said. " … [But] is Oprah going to resonate with [millennials] as much as, let’s say, Gen X, who remembers her on her TV show?" Indeed, WW has started taking on a wider variety of spokespeople from Kate Hudson to DJ Khaled, likely to help appeal to a wider audience and drive home the message that WW is now a wellness company focused less on drastic weight loss and more on balance. So what does that mean for the future of the diet brand turned wellness company? GYK Antler's Mike Stevens believes more membership is the key. "If WW isn’t able to start to get its membership moving in the right direction, then they will continue to not meet expectations," he said. Stevens added that he finds it "hard to believe that the brand needed to make such a dramatic shift" when he looks at the rebrand now. "Should it have gotten into wellness? Yes," he explained. "Should it update its program to include ways to help consumers after they lose weight and retain customers for a longer period of time? Yes. Should they have gotten aligned with Oprah? Yes. Should they have changed what their brand has meant for the past 56 years? No."

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What Weight Watchers' Bleak Outlook for 2019 Signals About the Old-School Diet Brand's Future

Some experts suggest WW may have pivoted too much

Katie Richards

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Katie Richards