Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
What: Shares of Weight Watchers International (NYSE: WTW ) were showing off their new figure today, rising as much as 27% after a better-than-expected first-quarter earnings report.
So what: Despite falling revenue, the weight-loss specialist cut costs to deliver an adjusted per-share profit of $0.31, much better than expectations of $0.09. Sales fell 16.6% in the period to $409.4 million, but that also beat estimates of $399.2 million. As recruitment appears to be stabilizing, CEO Jim Chambers said, "We are encouraged by the progress we are making on our transformation plan, but there is still a great deal of work to do."
Now what: Total paid weeks declined 13.7%, indicating that its customer "traffic" did not fall as much as the revenue slide may indicate. Weight Watchers is facing competition from new calorie-tracking free mobile apps, among other entrants, and the company has introduced its own app to widen its appeal. As a result of the strong quarter, management raised its full-year EPS guidance to $1.45-$1.70, ahead of estimates at $1.40. While the guidance boost is promising, I'd like to see the double-digit revenue declines disappear before jumping in.
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