August 5, 2013, 1:21 PM

While web sales grow nearly 7% Weight Watchers ‘falls short’ overall in Q2

The e-retailer’s new CEO promises to bring together the merchant’s online and offline businesses.

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Online sales were up slightly in the second quarter for weight loss products e-retailer Weight Watchers International Inc., but total sales were down and the merchant is struggling to recruit new paying members.

For the period ended June 29, 2013, Weight Watchers, No. 62 in the Internet Retailer Top 500 Guide, reported:

  • Internet revenue of $144.5 million, up 6.6% compared with $135.6 million in the second quarter of last year.
  • Total sales of approximately $465.1 million, a 4.1% drop from $484.8 million.
  • Net income was $64.9 million, a 16.3% decline from $77.5 million.

Weight Watchers “fell short” of expectations during the quarter, as the merchant’s 6.6% growth in online sales is a deceleration from the year-over-year growth of 10.9% in the first quarter, says Weight Watcher’s newly appointed CEO, Jim Chambers. “This deceleration was driven by declining sign ups in the U.S. business, which continued through the quarter, as the commercial weight loss category continued to be impacted by increasing consumer trial of activity monitors and free apps.”

Chambers takes over the CEO position from David Kirchhoff, who resigned as of July 30 to pursue other opportunities. Chambers joined Weight Watchers in January 2013 and has served since then as president and chief operating officer. Prior to joining the company, Chambers held such positions as president of the snacks division of Kraft Foods Inc., and CEO of the North American business unit of candy maker Cadbury plc.

One of Chambers’ goals for the coming year will be to combine the company’s online and offline businesses. “I've concluded that running our businesses in an integrated fashion, not as separate dot-com and meetings businesses, can release tremendous value, allowing us to better innovate against consumer needs,” Chambers told analysts on a conference call. “The businesses will be managed by the regions such that the GMs [general managers] and local business leaders will have clear accountability for the entire region performance, including the accountability for all consumers across all product offerings.”

As part of this effort, Weight Watchers appointed Catherine Ulrich to the newly created position of global chief product officer. She previously served as senior vice president of WeightWatchers.com. The merchant is still looking for a head of its North America business and a chief technology officer, Chambers says.

For the first half of the year, Weight Watchers also reported:

  • Internet revenue of $285.3 million, up 8.7% compared with the first two quarters of last year.
  • Total revenue of $952.1 million, a 3.8% drop from $988.3 million.
  • Net income of $113.7 million, a 13.9% decline from $132.1 million.
  • Active online subscribers grew 1% to 2.29 million from 2.26 million
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