Weight Watchers hopes Winfrey’s frankness about her decades-long struggle with weight loss may help revive the brand.

Reuters
Chicago

Media mogul Oprah Winfrey will buy a 10% stake in Weight Watchers International Inc, adding her celebrity and consumer appeal to a diet brand that has been shedding subscribers.
Shares of Weight Watchers soared on the news of Winfrey’s $43.2mn investment, closing up 105% at $13.92 on Monday. More than 71mn shares changed hands on US exchanges, the busiest trading day in the company’s history.
Weight Watchers has suffered from a shift in what US consumers consider to be healthy, as shoppers increasingly choose natural foods over diet programs. Consumers’ embrace of calorie-counting apps on mobile phones, and the popularity of wearable fitness trackers such as those made by Fitbit Inc, have also made it hard for Weight Watchers to stand out, particularly among younger people, analysts said.
Winfrey’s frankness about her decades-long struggle with weight loss may help revive the brand.
“The good thing about picking Oprah Winfrey is that although she is very much a really strong media personality, lots of people still see her as being a very ordinary person, a person that has struggled with things like weight loss,” said Neil Saunders, managing director of retail research firm Conlumino.
Weight Watchers initially approached Winfrey, 61, about a partnership, and she began using the company’s weight-loss program two months ago, said a spokesperson for the former talk show queen.
“Weight Watchers has given me the tools to begin to make the lasting shift that I and so many of us who are struggling with weight have longed for,” Winfrey said in a statement.
Winfrey plans to publicly document her experiences on the program and appear in advertisements, following previous endorsements by singers Jennifer Hudson and Jessica Simpson. Winfrey also will join Weight Watchers’ board of directors.
Winfrey was regarded as America’s most influential celebrity for years thanks to her daily talk show, magazine, book club and production company Harpo. Her influence has slipped since she ended ‘The Oprah Winfrey Show’ after 25 years in 2011 to launch the Oprah Winfrey Network (OWN) on cable TV.
“Her influence is not as strong with the younger generation,” said Efraim Levy, S&P Capital IQ analyst.
Still, Winfrey remains one of the richest and most powerful celebrities in the US. Forbes magazine has estimated her net worth at $3bn.
Winfrey will buy nearly 6.4mn shares of Weight Watchers at Friday’s closing price of $6.79 per share, and she will receive options to buy another 5%.
If Winfrey exercises those options, she will become the second-largest shareholder in the company, after investment firm Invus Public Equities Advisors, which owned a 51.5% stake as of June 30.
Prior to Monday’s gain, Weight Watchers’ stock had lost 92% of its value since a peak in May 2011. For several years, it attracted a steady flow of short sellers who believed the stock would fall further.
Weight Watchers currently has short interest of about 11.65% of shares outstanding, according to Markit, a relatively high level.
Weight Watchers is trying to woo clients who formerly focused on counting calories but who are now more interested in pursuing “health and wellness,” a trend that can encompass everything from consuming more natural ingredients to foods that are high in protein.
The switch has pressured sales of products ranging from low-calorie frozen dinners to diet soda.
Active online subscribers have dwindled to 2.8mn from a four-year high of 3.6mn in March last year.
Winfrey falls into Weight Watchers’ target audience of “aging females who want to look and feel their best,” said Gary Stibel, chief executive of New England Consulting Group, who has previously worked with the company.