Weight Watchers Stock Takes off ; 'Oprah Effect' Kicks in after Winfrey Joins Board of Slumping Diet Business

By Picker, Leslie | International New York Times, October 21, 2015 | Go to article overview

Weight Watchers Stock Takes off ; 'Oprah Effect' Kicks in after Winfrey Joins Board of Slumping Diet Business


Picker, Leslie, International New York Times


Ms. Winfrey will buy newly issued shares, worth about 10 percent of the company, and take a seat on the board.

Her show might be gone, but the "Oprah Effect" clearly endures.

After Oprah Winfrey said on Monday she would buy a 10 percent stake in Weight Watchers and take a seat on the board, the company's slumping stock doubled to $13.92 per share, adding about $400 million to its market value.

For years, Ms. Winfrey has helped make countless little-known brands wildly successful by endorsing them through one of the media ventures that made her a billionaire. But this is the first time she has made such an investment in a public company. Ms. Winfrey also plans to give Weight Watchers unfettered access to her name and face for marketing purposes.

"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," Ms. Winfrey said in a statement. "I believe in the program so much I decided to invest in the company and partner in its evolution."

Though one of the best-known names in weight loss, the 52-year- old Weight Watchers has had declining membership rolls in recent years as it has lost out to newer and more technologically oriented paths to shedding pounds, including weight-loss apps and fitness- tracking devices.

This year, Weight Watchers announced plans to cut roughly $100 million in additional costs and laid off the president of its North American business.

After 10 straight quarters of declining sales, the stock had slumped 73 percent, to $6.79 on Friday.

Only one analyst out of eight had encouraged investors to buy shares of Weight Watchers. But that did not stop Ms. Winfrey.

"It's like a win on steroids," said Erich Joachimsthaler, the chief executive and founder of the Vivaldi Partners Group, a brand- strategy consulting firm. …

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