Key Takeaways:
- Oprah Winfrey will not seek reelection to the board of WW International.
- WW’s stock price dropped 25% after the announcement.
- The departure of Oprah, known for the “Oprah Effect,” may challenge WW’s recovery.
- WW already faces industry changes, adding to uncertainty about its future.
The influential media figure who revitalized WW International, formerly WeightWatchers, is stepping down from their board after nearly ten years. The announcement of Oprah Winfrey’s departure, revealed in an SEC filing, caused the company’s stock to plummet by a significant 25% on Thursday morning.
This move suggests potential long-term challenges for the 60-year-old diet company’s relevance in today’s market. Once a dominant force in weight loss, especially among women, WW now faces stiff competition from modern alternatives like Ozempic, making it seem like an outdated operating system in comparison.
The “Oprah effect” was a boon for WW
Oprah Winfrey has wielded considerable influence in shaping wellness trends for nearly four decades. The “Oprah Effect,” a term coined by analysts, highlights her ability to significantly boost sales of products endorsed on “The Oprah Winfrey Show,” which aired from 1986 to 2011. This trend extended to WeightWatchers when Winfrey joined in 2015, investing in the company and becoming its public face. Despite WeightWatchers’ prior struggles, her involvement led to a remarkable turnaround, with the company’s value skyrocketing within three years.
Even indirect mentions of weight-loss methods by Winfrey, such as her disclosure of using a weight-loss drug to People Magazine, had notable effects. This disclosure prompted a surge in demand for GLP-1 medications, a popular new class of weight-loss drugs. In response, WW expanded its offerings by acquiring Sequence, a service providing weight-loss drugs, leading to a significant increase in its stock value.
Diet culture has changed
Oprah Winfrey’s significant influence on the flourishing trend of weight-loss drugs underscored a notable shift in the weight management landscape. While WW pioneered the “traffic light” system, categorizing foods into different colors to aid in calorie reduction, the industry has increasingly moved away from traditional diet plans focused solely on calorie cutting.
Instead, there’s a growing emphasis on more appealing and dependable options like weight loss medications. This shift is evident in the strategies of weight loss startups such as Noom and established institutions like the Mayo Clinic, all integrating programs that prioritize the use of GLP-1 medications.
Simultaneously, there’s a rising level of public awareness about weight, weight control, and obesity. Concepts like “food noise” and the impact of hormones and genetics on weight are becoming more widely understood. Obesity, once viewed primarily as a result of lifestyle choices and willpower, is now increasingly recognized as a medical condition by both patients and doctors alike.
What are the short-term impacts of Winfrey leaving WW?
Oprah Winfrey’s departure from WW, coupled with her decision to donate her remaining shares to the Smithsonian’s National Museum of African American History and Culture, undoubtedly deals a significant blow to the company.
The impact of the “Oprah Effect,” whether positive or negative, tends to linger for quite some time. For instance, when Oprah announced in 2016 that she had lost 40 pounds on WeightWatchers, the stock price surged by a staggering 170% within two days. It remained elevated for over a year before returning to a more normal level around 14 months later, as reported by Forbes. This illustrates the enduring influence and prolonged effects associated with Oprah’s association with the company.
Long-term, WW needs to find a new identity
WW stands to benefit from its venture into providing access to hard-to-obtain weight-loss drugs like Ozempic, Wegovy, Mounjaro, and Zepbound. Unlike alternatives found in med spas or compounding pharmacies, which may lack clarity on ingredients, WW’s offerings ensure reliable and regulated medication. Additionally, with a growing subscriber base, there’s optimism among some market analysts about WW’s future prospects.
However, uncertainties linger, with some analysts cautioning that the company’s trajectory remains unpredictable, especially given the unprecedented nature of recent developments. Oprah Winfrey’s disclosure of GLP-1 drug use and departure from WeightWatchers signify a broader shift away from traditional dieting methods, with smaller meals and strict calorie counting losing prominence.
WW’s attempts to adapt its brand to changing wellness trends, such as investing in the Kurbo diet app for kids and adopting the tagline “wellness that works,” have yielded mixed results. Despite these efforts, the company has transitioned from profitability to losses over the past three years, raising questions about the efficacy of its strategy shift towards weight-loss drugs.
While WW’s foray into weight-loss drugs presents a potential avenue for growth, its ultimate success remains uncertain in a rapidly evolving market landscape.
Discover more from The UBJ - United Business Journal
Subscribe to get the latest posts sent to your email.