Online diet services provider eDiets.com
In the third quarter, revenues fell 8% to $12.2 million and net income fell from $2.08 million, or $0.09 per share, to $465,000, or $0.02 per share.
About 78% of eDiets' revenues come from selling subscriptions to dieters. Basically, the content includes an assortment of fitness plans. In fact, eDiets has licensed top programs such as Atkins, The Perricone Prescription, Slim Fast, and so on.
Of course, this is a tough business; customers can choose between Weight Watchers
Interestingly enough, eDiets has been reducing its marketing and advertising spending. In the third quarter, the expenditure was $5.9 million, which was down from $7.5 million in the same period a year ago. Unfortunately, during this time, membership revenues fell from $11.5 million to $9.5 million.
But eDiets is trying to make up for this shortfall. For example, there is more emphasis on selling advertising on its portal site, and the company recently launched a food delivery service that includes chef-prepared offerings that meet personalized diet plans.
The problem? Well, with membership falling -- as well as much less money being spent on marketing -- there are fewer opportunities to monetize these new initiatives.
In fact, eDiets provided little color on the meal delivery program -- saying that it looks more like a "longer-term opportunity."
Finally, the company recently acquired Nutrio.com, which is a private-label system for companies to provide employees with diet information. Unfortunately, this is really not a "must have" for corporate America. Also, eDiets now must stretch its small organization to deal with two customer segments: the mass consumer and businesses.
Although eDiets is attempting to make key changes to improve the company's prospects, its core membership business is still deteriorating. Until the company can show more evidence of traction in its other business segments, the stock price will likely continue to languish.
For more Foolish feeds:
- eDiets.com Goes on a Feeding Frenzy
- A New Diet for eDiets
- More Flabby Performance at Weight Watchers
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