WeightWatchers 2004 Annual Report Download - page 16

Download and view the complete annual report

Please find page 16 of the 2004 WeightWatchers annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 116

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116

readers per copy, one of the highest in the industry. In addition to generating revenues from
subscription sales and advertising, Weight Watchers Magazine reinforces the value of our brand and
serves as an important marketing tool to non-members. We also publish Weight Watchers magazines in
all of our other major markets.
WeightWatchers.com
Our affiliate and licensee, WeightWatchers.com, operates the Weight Watchers website, which is an
important global promotional channel for our brand and businesses. The website contributes value to
our classroom business by promoting our brand, advertising Weight Watchers classes and keeping
members involved with the program outside the classroom through useful offerings, such as a meeting
locator, low calorie recipes, weight-loss news articles, success stories and online forums. During fiscal
2004, an average of approximately 137,000 unique visitors per week used our Meeting Finder feature.
The Meeting Finder makes it easier than ever for our members to find a convenient meeting place and
time. WeightWatchers.com now attracts an average of over 2.5 million unique visitors per month.
Entrepreneurial Management
We run our company in a decentralized and entrepreneurial manner that allows us to develop and
test new ideas on a local basis and then implement the most successful ideas across our network. We
believe local country and regional managers are best able to develop new strategies and programs to
meet the needs of their markets. For example, local managers in the United Kingdom were responsible
for developing our POINTS-based program. In addition, many of our classroom products were
developed locally and then introduced successfully in other countries. Local managers have strong
incentives to adopt and implement the best practices of other regions and to continue to develop
innovative new programs.
Competition
The weight-loss market includes commercial weight-loss programs, self-help weight-loss diets,
products and publications, Internet-based weight-loss products, dietary supplements and meal
replacement products, weight-loss services administered by doctors, nutritionists and dieticians, surgical
procedures, weight-loss drugs and weight-loss and fitness centers for women.
Competition among commercial weight-loss programs is largely based on program recognition and
reputation and the effectiveness, safety and price of the program. In the United States, we compete
with several other companies in the commercial weight-loss industry, although we believe that the
businesses are not comparable. For example, many of these competitors’ businesses are based on the
sale of pre-packaged meals and meal replacements. Our classes use group support, education and
behavior modification to help our members change their eating habits, in conjunction with flexible food
plans that allow members the freedom to choose what they eat. There are no significant group
education-based competitors in any of our major markets, except in the United Kingdom. Even there,
we have an approximately 50% market share and approximately twice the revenues of our largest
competitor, Slimming World.
We believe that food manufacturers that produce meal replacement products are not comparable
competition because these businesses’ meal replacement products do not engender behavior
modification through education in conjunction with a flexible, healthy diet.
We also compete with various self help diets, products and publications. Beginning in 2003,
low-carb diets, such as Atkins and South Beach, gained in popularity and media exposure. These diets
advocate dramatic reductions in carbohydrates that result in calorie reduction. We believe that the
appeal of these programs has peaked and the low carb phenomenon is now in decline.
8