Seeking Alpha

Weight Watchers shrinks on revenue warning, dividend suspension

  • Shares of Weight Watchers (WTW -18.1%) tank after management issues a grim warning that revenue may fall by low double-digits in 2014 and suspends the dividend.
  • Although management raised full-year EPS guidance to $3.85-$3.95 from $3.55-$3.70 (and vs. consensus of $3.63), it warned that if "expected negative recruitment trends in the fourth quarter were to persist through 2014, this, combined with a lower starting actives base, would result in a low double-digit revenue decline next year." It wasn't the news the Street wanted to hear, with analysts having forecast a revenue decline of 2.9%.
  • Weight Watchers also suspended its dividend (yield of 1.8%). The company will use the annual savings of $39M to fund strategic growth initiatives and build balance sheet strength for future debt repayments.
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