Weight Watchers, Inc. finally posted a gain in its stock this year, on the news that media giant Oprah Winfrey purchased a 10 percent stake in the company.
Despite her history of weight loss attempts, this will be the first time that Winfrey has joined Weight Watchers, much to the satisfaction of the 52-year-old company. With her endorsement, Weight Watchers hopes to recharge its customer base and fuel a reinvention that will better appeal to millennials.
Oprah is very, very powerful. According to data from the Omnicom Group-owned Marketing Arm, Winfrey ranks number four out of the most powerfully influential celebrities in the customer mind. Only Kate Middleton, Bill Gates and Taylor Swift outrank her. That could spell a massive turnaround for the ailing brand, one that both Winfrey and Weight Watchers are banking on.
With competition like Under Armor Inc.’s MyFitnessPal, Weight Watchers, Inc., needs all the help it can get. Although it has long promoted a healthy lifestyle through gradual diet change and exercise, Weight Watchers has struggled to appeal to younger users, who are increasingly using apps to track their food intake.
What about Oprah’s fan base? Although Winfrey isn’t an icon for this generation yet, her enormous fan base may provide a means to stop the revenue plummet that Weight Watchers has been experiencing for the last 10 quarters. Once income has stabilized again and the brand is back on the radar, Weight Watchers can focus more on recruiting younger users.
It’s important to note that this is the first major weight loss brand that Winfrey has agreed to partner with despite countless offers. “What made Weight Watchers different is that the mission of the brand is in perfect alignment with her own ideas,” stated Winfrey’s spokesperson Nicole Nichols, according to the Wall Street Journal. Although Winfrey has no current plans for her magazine or television station to feature Weight Watchers brand, “that could change down the road.”
Winfrey agreed to pay $43 million for 6.4 million shares and another $14 million option on an additional 3.5 million shares. Based on the stock price the day after the deal, she’s already sitting on $75 million in paper profit. That’s a promising reset for the five decades old weight loss brand.Google+