Weight Watchers: Initiation

Jory M. Eisenberg - Senior Analyst - Special Situations

EXECUTIVE SUMMARY
  • We initiate coverage on WW International (WW) in a two part series. WW (formerly known as Weight Watchers) is a world leading commercial weight management program that combines a digital subscription platform with supportive in-person group sessions moderated by trained coaches.
  • In Part 1 of this report, we analyze WW’s business model, discuss recent subscriber growth trends, discuss the industry and competitive threats and analyze the Company’s various debt facilities.
  • In Part 2, we analyze the Company’s recent financial performance, present a five-year projection model and will establish recovery value expectations and trade recommendations.
  • COVID-mandated lockdowns left a permanent mark on the Company’s in-person studio subscription business. The Company has had some success offering enhanced virtual engagement for digital subscribers although significant product refinement work remains.
  • Increasingly competitive landscape from stalwarts such as Jenny Craig and Nutrisystem has been further intensified by the rapid rise of digital competitor Noom and a plethora of freemium offerings. Do it yourself (“DIY”) remains the biggest competitive threat despite continued scientific evidence that formal weight loss programs consistently lead to statistically significant outperformance.
Relative Value

We initiate coverage on WW International (formerly known as Weight Watchers), a world leading commercial weight management program that combines a digital subscription platform with supportive in-person group sessions moderated by trained coaches. In this report, we analyze WW’s business model, discuss recent subscriber growth trends, discuss the industry and competitive threats and analyze the Company’s various debt facilities. In our Part 2 report, we analyze the Company’s recent financial performance, present a five-year projection model and will establish recovery value expectations and trade recommendations.

Company Background Weight Watchers is a global wellness company powered by a world leading commercial weight management program and an award-winning digital subscription platform, combing elements of a convenient online and mobile app tracking/recording tool and supportive in-person live group sessions under the guidance of trained coaches. The Company is focused on inspiring people to adopt healthy habits for real life by providing them with guidance,
digital tools and an inspiring community.
The Company indicates the Weight Watchers program is the # 1 Doctor
recommended weight loss program and has been ranked as the # 1 best diet for weight loss by U.S. News & World
Report for 12 consecutive years (2011-22).

We rate the TLs…

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