Investors sent shares of WW International—formally known as Weight Watchers—tumbling by 26.5% after the weight-loss specialists reported a disappointing second quarter dip in sales that fell well below Wall Street expectations.
And the outlook isn’t any prettier—surprising in a period when so many of us working and schooling from home put unwelcome pounds on during lockdowns.
The company on Tuesday forecast full-year profits would fall below even the low range of analyst estimates as online subscriber growth slows. The New York–based company also put per-share earnings in the range of $1.10 to $1.25—a hefty drop from analysts’ estimates of $1.46 to $2.33, data compiled by Bloomberg show.
The company earned $8.9 million, or 12¢ a share, in the second quarter of 2021 compared with $14 million, or 20¢ a share, made in the same quarter last year. Revenue also fell to $311 million, down 10% from the $334 million logged last year.
The company noted that full-year revenue would approach $1.3 billion—which again trailed estimates of $1.39 billion—as subscriber numbers fell 1.9%. A total of 4.9 million members were logged, down from the 5 million recorded in the second quarter of 2020.
Putting on the pounds
The news comes at a unique time for our collective waistlines. Public health officials have been warning of troubling accounts of big weight gains during the pandemic. An American Psychological Association survey of U.S. adults, for example, conducted in late February 2021, a year after the pandemic began, found that 42% of adults had gained more weight than intended during lockdowns.
“There is no shortage of statistics and stories about weight gain during the pandemic,” said chief executive Mindy Grossman, who chalked up the lackluster results in revenue and operating income to slowing digital year-on-year growth momentum for digital subscribers. She noted that “while people are acknowledging their need for recommitting to weight loss and wellness, our recent consumer research shows that at the moment they’re also asking for a pause to enjoy social reconnection.”
“Given the prevalence of weight gain joining the pandemic, it does feel like a temporary dislocation,” said Nicholas P. Hotchkin, WW chief operating officer.
The news was also surprising as other online meal kit, food delivery, and grocery store services soared during the pandemic and are showing little to no slowdown in growth. But this too was put down to seasonal changes. “Subscriber trends in Q2 followed a more typical seasonal pattern than we expected, and our guidance reflects this trend,” said chief financial officer Amy O’Keefe.
If the stock were to finish down 26% on Wednesday, it will mark the worst one-day drop following earnings since the fourth quarter of 2018.
Unofficially, it’s been a bad day for the company on Twitter, too.
Subscribe to Fortune Daily to get essential business stories straight to your inbox each morning.