Weight Watchers Losing Points

It is usually a pleasant experience for me to go out with my wife and another couple for dinner. Just getting a night off from the kids is pure joy. But on occasion, the relaxing evening turns into a complicated math problem as a friend's wife asks more questions than Sally Albright in When Harry Met Sally in order to count her Weight Watchers (NYSE: WTW) points accurately.

Why is it that people like counting food statistics so much? And could it be that the carb-counting craze has taken the place of counting Weight Watchers' points? I can't even tell you how many Kraft (NYSE: KFT)/Nabisco Oreo cookies I've eaten at a given sitting, but my full stomach tells me it's a good handful.

This spring and early summer, people must have been counting more carbs than points -- and maybe even losing weight through (gasp!) outdoor exercise -- because Weight Watchers said that lower attendance at its programs hurt second-quarter results. The company also used the word "softness" to describe the drop, an ironic choice of words as it counts on body softness for its corporate health.

Earnings fell 1.7% for the quarter, versus last year, but were in line with analysts' consensus estimates of $0.49 per share. Despite thriving international operations, the company tightened its earnings guidance for the full year to $1.70-$1.75 per share from a previous range of $1.70-$1.80 per share.

Weight Watchers has been in the news quite a bit lately. First, it praised Medicare for its declaration that obesity is an illness and treatment will probably be covered in the future (of course, this should benefit "attendance"). On the flip side, the company is in the midst of a litigation battle with CoolBrands. This messy difference of opinions is described in detail in Tim Beyers' recent article, Weight Watchers' Food Fight.

With so much competition in the weight-loss industry, the stress could make you plunge into a pint of Ben & Jerry's ice cream with the skill of an Olympic diver. With America's obesity levels sky-high, people will continue to feel the need to lose a few pounds. But I'm always wary of companies involved in potentially lengthy lawsuits. This conflict, combined with the softer attendance levels, gives me investment pause. In this case, the Weight Watchers points just don't add up.

For more on Weight Watchers, check out Tim Beyers' commentary, Waiting for Weight Watchers.

Fool contributor Phil Wohl spent more than 12 years on Wall Street and now concentrates his writing on more fictional characters. He has no stake in any firm mentioned above.