Someone better tell NutriSystem's
Neither Dan Marino, Terry Bradshaw, nor Marie Osmond has the star power needed to turn this misguided ship around. Last night, NutriSystem reported its fourth-quarter results and provided its forecast for the first quarter and … let's just say that pounds weren't the only thing being shed.
For the quarter, NutriSystem lost $0.04 on a 24% drop in sales, to $66.9 million. Overall, sales topped estimates slightly but the loss was $0.02 more than Wall Street had expected. The wheels really came off the grocery cart when the company forecasted a first-quarter loss ranging from $0.05 to $0.10 while the Street was looking for a profit of $0.10.
The company stated that it would need to spend more on marketing and advertising in order to draw more clients to its business. This is something I've said again… and again… and again, but NutriSystem is terrible when it comes to client retention. The average client stays with the company only 10 to 11 weeks. With numbers like that, it's no wonder that NutriSystem needs to change up its game plan every few months in order to draw new clientele.
This is a trend that has persisted throughout the weight-loss sector recently. Weight Watchers International
Supplemental-health companies have had mixed performances as well. Vitacost.com
NutriSystem is betting the boat in 2012 on an aggressive marketing campaign and a new line of in-store grocery products designed to boost sales and product awareness. Perhaps if customers see the name more frequently, they'll be more apt to stick with the service? It's a novel idea, but it seems like an uphill battle that NutriSystem has fought before, and lost every time. Shedding profits like its customers want to shed pounds, this company looks like it could be a bumpy ride for shareholders.
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