WeightWatchers 2005 Annual Report Download - page 23

Item 1A. Risk Factors
You should consider carefully, in addition to the other information contained in this Annual Report on
Form 10-K and the exhibits hereto, the following risk factors in evaluating our business. Our business,
financial condition or results of operations could be materially adversely affected by any of these risks.
Competition from a variety of other weight management industry participants or the development of
more effective or more favorably perceived weight management methods could result in decreased
demand for our products and services.
The weight management industry is highly competitive. We compete against a wide range of
providers of weight management products and services. Our competitors include: self-help weight
management regimens and other self-help weight management products and publications such as books,
tapes and magazines; commercial weight management programs; Internet weight management
approaches; dietary supplements and meal replacement products; weight management services
administered by doctors, nutritionists and dieticians; surgical procedures; the pharmaceutical industry;
government agencies and non-profit groups that offer weight management services; and fitness centers.
Additional competitors may emerge as new or different products or methods of weight management
are developed and marketed. More effective or more favorably perceived diet and weight management
methods, including pharmaceutical treatments, fat and sugar substitutes or other technological and
scientific advances in weight management, also could be developed. This competition may reduce
demand for our products and services. Any such decrease may adversely affect our business, financial
condition and results of operations.
The purchasing decisions of weight management customers are highly subjective and can be
influenced by many factors, such as brand image, marketing programs, cost and perception of the
efficacy of the product and service offerings. Moreover, customers can, and frequently do, change
weight management approaches easily and at little cost. For example, in fiscal 2003 and fiscal 2004, our
revenue growth was adversely affected by increased popularity and media exposure of low-carbohydrate
diets.
Our operating results depend on the effectiveness of our marketing and advertising programs.
Our business success depends on our ability to attract and retain members to our meetings and
subscribers to WeightWatchers.com. The effectiveness of our marketing practices, in particular our
advertising campaigns, is important to our financial performance. If our marketing and advertising
campaigns do not generate a sufficient number of members and subscribers, our results of operations
will be adversely affected.
If we do not continue to develop innovative new products and services or if our products and services
are not accepted by the market, our business may suffer.
The weight management industry is subject to changing customer demands based, in large part, on
the efficacy and popular appeal of weight management programs. Our future success depends on our
ability to continue to develop and market new products and services and to enhance our existing
products and services on a timely basis to respond to new and evolving customer demands, achieve
market acceptance and keep pace with new nutritional and weight management developments. We may
not be successful in developing, introducing on a timely basis or marketing any new or enhanced
products and services, and we cannot assure you that any new or enhanced products or services will be
accepted by the market. Our failure to develop new and innovative products and services or the failure
of our products and services to be accepted by the market would have an adverse impact on our
business, financial condition and results of operations.
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