Shares of Weight Watchers International, Inc. (WTW) gained more than 11 percent in extended trading on Thursday after the weight management services provider's results for the first quarter beat analysts' expectations. Looking ahead, the company narrowed its fiscal 2013 earnings outlook range.
The New York-based company's first-quarter profit declined 11 percent on lower revenues. The decline in revenues were attributable to lower sales in the meetings business on weaker volumes globally, most notably in North America and the UK. This decline was partly offset from continued growth in the WeightWatchers.com business across all geographies.
David Kirchhoff, Chief Executive Officer of the Weight Watchers said, "As we previously indicated, the winter diet season proved to be challenging for recruitment across our businesses given a weak consumer backdrop and an intensely competitive environment. In response, we have made several adjustments to improve our position in the market with consumers, including new advertising campaigns."
The company's total paid weeks grew 1.4 percent over last year, with online paid weeks increasing 10.3 percent. Meeting paid weeks declined 8.1 percent.Internet revenues at WeightWatchers.com grew 11 percent from the year-ago period to $140.8 million, with end-of-period active online subscribers rising 6.2 percent.
Weight Watchers' first-quarter net income was $48.8 million, down from $54.6 million in the year-ago period. However, earnings per share increased to $0.87 from $0.74 last year, benefiting from the completion of the company's previously disclosed tender offer and related stock repurchase transaction that took place in March and April 2012.
On average, eight analysts polled by Thomson Reuters expected the company to earn $0.62 per share for the quarter. Analysts' estimates typically exclude special items.
Revenues for the quarter declined 3 percent to $486.9 million from $503.5 million in the same period last year. Analysts had a consensus revenue estimate of $484.25 million.
Looking ahead to fiscal 2013, Weight Watchers narrowed its earnings guidance to a range of $3.60 to $3.90 per share from the previous range of $3.50 to $4.00 per share. Analysts currently expect earnings of $3.62 per share for the year.
The outlook includes the impact of about $0.15 related to higher interest expense from the company's recent debt refinancing, but excludes an expected one-time charge to be taken in the second quarter related to the write-off of fees associated with the debt refinancing.
Kirchhoff said, "We are narrowing our fiscal 2013 earnings guidance to incorporate our business trends to date, our current cost savings program and the effect of higher interest expense related to our recent debt refinancing."
WTW closed Thursday's regular trading session at $42.31, down $0.07 or 0.17 percent on a volume of 1.09 million shares. In after-hours, the stock gained $4.78 or 11.30 percent to $47.09.
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