WeightWatchers 2002 Annual Report Download - page 4

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Speaking of getting the best from Weight Watchers, one area we were
particularly pleased with in 2002 was our success in expanding our product
sales. For the year, product sales grew 39% worldwide, led by impressive 47%
growth in our North America operations. Product sales, which include popular
offerings such as our Just 2-POINTS!®Bars, provide members with helpful
tools to manage their diets, as well as delicious low-POINT snacks to satisfy
cravings in between meals. Members love these products and they continue
to be an important driver of our growth, providing us with high margin,
incremental revenue per meeting.
We fuel this product sales growth by constantly refreshing our focused array
of offerings and sharing best practices across our organization. For example,
in 2002, we introduced Fruities, our first confectionary product in the U.S.,
a successful product in the U.K. for many years. Another example is the 2002
introduction of the U.S.’s 12-week spiral-bound journal in the U.K.,
Continental Europe and Australasia. Both of these products are helpful to our
members’ efforts and have been well received in their new markets.
Another highlight in 2002 was the evolution of Weight Watchers Magazine.
After re-launching the U.S. magazine in early 2000, Weight Watchers
Magazine now boasts a circulation of over 1 million copies, with issues flying
off the newsstands well above industry norms. The magazine’s readership
per copy (8.8 as measured by Media Mark Research) is now the highest of all
women’s service and healthy lifestyle magazines. Combined with the strong
word-of-mouth marketing we enjoy, the magazine plays an important role in
reinforcing our brand. Consumers have really embraced our Weight Watchers
Magazine as a valuable tool in the area of weight control.
Also impressive is the performance of our licensee, WeightWatchers.com.
WeightWatchers.com is an excellent marketing vehicle for our business as well
as an increasingly valuable business in its own right. In 2002, they increased
revenues five-fold to $46 million and were cash flow positive in each quarter
of 2002. We benefit not only from their efforts to market our business but
also from a 10% license fee on their net revenue and a 38% fully diluted
ownership stake.
Looking at our international efforts, in 2002 we launched the POINTS Plus
Plan in Continental Europe, our first innovation of the POINTS Weight-Loss
One area we were
particularly pleased with
in 2002 was our success
in expanding our
meeting product sales.
For the year, product
sales grew 39% world-
wide, led by impressive
47% growth in our North
American operations.