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Why Weight Watchers Stock Lost 37% in February

By Demitri Kalogeropoulos – Updated Apr 10, 2019 at 6:40PM

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The nutrition specialist endured weaker growth during the year's most important sales period.

What happened

Weight Watchers (WW -9.00%) stock trailed the market by a wide margin last month in losing 37% compared to a 3% spike in the S&P 500, according to data provided by S&P Global Market Intelligence.

The decline added to brutal losses for shareholders recently, with the stock down by more than 65% in the past 12 months.

A man stands on a bathroom scale.

Image source: Getty Images.

So what

Investors reacted harshly to the weight loss and nutritional services specialist's fourth-quarter earnings report last month. In that announcement, Weight Watchers revealed solid subscriber growth to end fiscal 2018. However, the company's membership gains slowed during the key seasonal period at the start of the year. This sluggish showing led executives to forecast a tough year ahead, with sales down in the mid-single digits as profitability declines.

Check out the latest earnings call transcript for Weight Watchers.

Now what

CEO Mindy Grossman and her team are focused on getting growth back on track, and they've already made some major marketing changes, including by featuring Oprah Winfrey more centrally in their advertising. The stock isn't likely to post a sustained rebound, though, until it becomes clear that Weight Watchers has made the right adjustments. Thus, investors will be following key metrics like subscriber gains and gross profit margin over the coming quarters in hopes that the company can return to healthy growth by 2020.

Demitrios Kalogeropoulos has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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