Weight Watchers needs more than Oprah Winfrey’s star power: Stocks fall following CEO’s resignation

Despite endorsement from TV mogul Oprah Winfrey, Weight Watchers (NYSE: WTW) is sinking fast. The weight loss company announced Monday it would be replacing current CEO James Chambers amidst reports that it lost US$1.2 billion (AU$1.6 billion) in the last 11 months.

Chambers, who has occupied the role for three years, will be stepping down on Sep. 30. The company said it was a “joint decision” between Chambers and the board of directors.

Following Chambers’ resignation announcement, shares in Weight Watchers fell 8 percent on Tuesday. This further exacerbates the company’s future as its stocks are already down 55 percent this year.

When Winfrey joined the board and took a 10 percent stake, or nearly 6.4 million shares, in the company for US$43 million (AU$57 million) in October, helping the stocks rise 105 percent. However, the former daytime talk show’s endorsement and involvement in Weight Watchers were not enough to maintain the stock prices in the following months.

The company would need more than Winfrey’s star power to bring the stocks back up again. As Bloomberg’s Shelly Banjo notes, Weight Watchers needs a real business plan. With the rise of Apple watches, Fitbits and other wearable health trackers, the company’s programs are quickly becoming outdated. People are now following weight-loss gurus on YouTube, as well as using free mobile apps to track their eating habits for free.

And although Weight Watchers has its own app, the publication says it is not compelling enough to convince customers to pay for something they can get for free somewhere else. Bloomberg advises that it could create more personalised diet and fitness regimes, offer meal delivery, and target under-served groups like pregnant and nursing women and vegetarians.

While Weight Watchers is looking for Chambers’ replacement, CFO Nicholas Hotchkin and board members Thilo Semmelbauer and Christopher Sobecki will take over temporarily, Market Watch reports.