Oprah Winfrey, premier spokesperson and second-largest investor in WW International (WW +1.26%), formerly known as Weight Watcher’s, has extended her partnership with the company until 2025. Winfrey has helped many companies reach stratospheric levels, but saving a failing weight loss brand may prove to be “weigh” more challenging. After a failed rebrand, can the media mogul help WW investors’ appetite and get them more “bread”?
Why This Matters: Even though shares of WW are up 450% since Winfrey got involved, the problem is that folks are less interested in old fashioned carbs. Diets like paleo along with keto are currently en-vogue with health-conscious audiences. This is why WW’s Q3 revenues came in at $348 million, well below analyst estimates of $353 million. The company reiterated its 2019 revenue forecast of $1.4 billion, which is down from $1.66 billion. Even though shares are flat for the year, the last time they fell off a cliff, Winfrey lost $48 million. That’s enough money to put almost anyone on a diet.
Through her extended partnership with WW she has the option to purchase an additional 3.3 million shares. That’s another 4.3% of the company.
In 2015, Winfrey bought an estimated 10% stake — over 6 million shares in the weight loss company — when the stock was trading under $7 a share. It’s now selling above $40. Since then, she has taken some of her WW chips off the table after selling a portion of her stock in March of 2018. The media mogul still owns around 8% of the company and holds 5.4 million shares, a stake once worth $500 million.
Through her extended partnership with WW she has the option to purchase an additional 3.3 million shares. That’s another 4.3% of the company. The option is subject to shareholder approval and would result in a one-time approximately $62 million charge.
What’s Next: In addition to providing WW “insights,” Winfrey will stay on as a board member, strategic partner and advisor through April 2023. She will also continue to be a key advisor with WW through May 2025. If you’d like to feel the Oprah Effect in person, she’s kicking off a tour in January with WW where she’ll interview celebrities, including former first lady Michelle Obama.
This article was originally published in CultureBanx. It is reposted here with permission. Read the original.
