You are here
Home > World > Oprah comes to the rescue of Weight Watchers

Oprah comes to the rescue of Weight Watchers

Weight Watchers soars on Oprah investment
Weight Watchers soars on Oprah investment

Can Oprah turn Weight Watchers around?

Oprah Winfrey and Weight Watchers announced a partnership Monday in which Winfrey is buying a 10% stake in the company and taking a seat on its board of directors.

Winfrey and Weight Watchers said the move comes as part of a new emphasis at the company away from just weight loss, adding a focus on overall health and happiness.

The business of Weight Watchers has been suffering. Sales were down 22% and profits nearly 50% in the first half of this year. And shares have plummeted 72% in 2015 before the Oprah announcement.

But shares of Weight Watchers(WTW) soared 60% in early trading on the news to about $11 a share.

According to a company filing, Winfrey paid just under $7 a share, or about $43 million, for her stake.

“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,” said Winfrey. “I believe in the program so much I decided to invest in the company and partner in its evolution.”

Winfrey has typically had a golden touch. Her endorsements have juiced the sales of products and books she mentioned on her show.

I believe in the @weightwatchers program so much I decided to invest, join the Board, and partner in #wwfamily evolution.

— Oprah Winfrey (@Oprah) October 19, 2015

While the publicity is undoubtedly helping shares of Weight Watchers Monday, the price jump could be the result of what is known on Wall Street as a “short squeeze.”

About 75% of the shares of the company’s stock had been held by investors who were betting that the price would continue to fall. That is known as a short position. But that’s a risky bet that can result in huge losses if a stock increases in value. To cap those losses short sellers have to buy shares of the stock if it starts to rally, and those purchases can feed into the rise in the stock’s price.

Weight Watchers started about 50 years ago when the company says founder Jean Nidetch began inviting friends to her Queens, New York, home to discuss the best way of losing weight.

Today Weight Watchers offers coaching and meetings as well as branded versions of its food and has annual sales of $5 billion. It was one of the first national diet programs. But now that field includes many competitors along with rival theories on the best way to lose weight.

Winfrey, whose own battle with her weight was a staple of her long-running talk show, has an estimated net worth of $3 billion, according to Forbes. That ranks her as the nation’s fifth wealthiest self-made American woman.

While Winfrey no longer has her syndicated television talk show, which she gave up in 2011, she still presides over a media empire that includes her own four-year old cable network, OWN.

The announcement does not mention whether she will be a spokesperson for the company.

CNNMoney (New York) October 19, 2015: 1:57 PM ET



Similar Posts

Web Design BangladeshBangladesh Online Market