Weight Watchers Shares Gain As Q1 Earnings Beat View, 2014 Outlook Raised

(RTTNews) - Weight Watchers International, Inc. (WTW) gained almost 12 percent in extended trades Wednesday after the weight management services provider's adjusted earnings for the first quarter beat analysts' estimates and the company raised its fiscal 2014 earnings outlook above Street expectations.

However, the company's profit for the first quarter declined 56 percent from last year, reflecting lower revenues.

The New York-based company reported first-quarter net income of $21.5 million or $0.38 per share, down from $48.8 million or $0.87 per share in the prior-year period. The latest quarter's results include a gain on the company's Brazilian partnership of $6.4 million or $0.11 per share and restructuring charges of $2.2 million or $0.04 per share.

Excluding items, adjusted net income for the quarter was $17.4 million or $0.31 per share, compared to $48.8 million or $0.87 per share in the year-ago quarter. On average, seven analysts polled by Thomson Reuters expected the company to earn $0.09 per share for the quarter. Analysts' estimate typically exclude special items.

Revenues for the quarter declined 17 percent to $409.4 million from $490.8 million in the prior-year period. Analysts had a consensus revenue estimate of $399.20 million.

The company's total paid weeks or global engagement, decreased 13.9 percent over last year, with meeting paid weeks declining 16.0 percent. Online paid weeks were down 12.2 percent.

These declines were driven by lower active subscriber bases for both monthly pass and online at the start of the year and lower recruitments in both the company's meetings and online businesses versus the prior year period.

Total attendance also dropped 16.2 percent from last year. Active subscribers at the end of the quarter declined 13.7 percent from the year-ago period to 3.65 million.

Effective the first day of fiscal 2014, Weight Watchers realigned its organizational structure and now has four reportable segments - North America, United Kingdom, Continental Europe and Other. Other consists of Asia Pacific, emerging markets and franchise revenues.

For the North American business, service revenues, net declined 18.3 percent on a constant currency basis versus the prior-year period, driven by a 17.2 percent decline in total paid weeks. The decline in paid weeks was driven by lower monthly pass and online active subscriber bases at the start of the year and lower first quarter 2014 recruitments as compared to the prior-year period.

Looking ahead to fiscal 2014, Weight Watchers raised its outlook for earnings to a range of $1.45 to $1.70 per share from the prior range of $1.30 to $1.60 per share. Analysts expect the company to report earnings of $1.40 per share for the year.

The guidance incorporates the fact that fiscal 2014 includes a 53rd week, which bridges the last week of December 2014 and the first week of January 2015, and has an expected negative $0.04 impact on full-year earnings per share.

WTW closed Wednesday's regular trading session at $19.80, down $0.72 or 3.51 percent on a volume of 2.96 million shares. However, in after-hours, the stock gained $2.35 or 11.87 percent to $22.15.