WeightWatchers 2011 Annual Report Download - page 53

For the full year fiscal 2010, NACO meeting paid weeks declined 1.0% and attendance declined 5.7%
versus the prior year as a result of performance weakness in the early part of the year. First quarter meeting paid
weeks declined 8.0%, and attendance was down 16.0%, compared to first quarter of fiscal 2009. The
performance weakness was the result of a marketing campaign that was ineffective at recruiting customers,
coupled with the impact of very poor weather conditions in the quarter which resulted in some meeting closures
and low attendance in the remaining meetings in weather-affected areas. In the spring of fiscal 2010, NACO
launched a new marketing strategy and campaign focused on member experience, featuring Jennifer Hudson as
its new spokesperson. With this change, business performance began an improvement trend in the second quarter
of fiscal 2010 that continued through the rest of the year.
In addition, NACO initiated other growth strategies during fiscal 2010, including revamping the retail
structure in select markets, with a focus on a new look and feel for the meeting centers, and consolidating
meetings toward stronger locations and better performing leaders. These new strategies coupled with the launch
of the PointsPlus program in late November resulted in a positive end to fiscal 2010, with solid growth in the
fourth quarter in both paid weeks and attendance, up 4.2% and 6.8%, respectively, versus the fourth quarter of
2009.
For the full year fiscal 2011, NACO paid weeks increased 26.4% and attendances increased 18.8% versus
the prior year. The growth we experienced in fiscal 2010 resulted in an increase in our customer base such that
we entered fiscal 2011 with more active members than at the beginning of fiscal 2010. Driven by the momentum
of the new program launch and supported by strong marketing and public relations activities, recruitment trends
in the first quarter of fiscal 2011 further improved upon the positive trend we experienced in fiscal 2010 and
were successful at driving new and existing members into the brand. As a result, first quarter 2011 paid weeks
increased 32.6% and attendances increased 33.1% as compared to the prior year period, which had been
negatively impacted by ineffective marketing and poor weather conditions. The growth trend in fiscal 2011
continued strong through the remainder of the year as compared to the prior year period, albeit at a slightly
slower pace, as we began to cycle against the highly successful marketing campaign in the second quarter of
fiscal 2010 and the soft launch of our new program innovation in the fourth quarter of fiscal 2010. For the
second, third and fourth quarters of fiscal 2011, paid weeks increased 31.9%, 25.9% and 15.0% and attendances
increased 19.8%, 13.6% and 5.5%, respectively, as compared to the prior year periods.
United Kingdom Meeting Metrics and Business Trends
In the United Kingdom, Monthly Pass was introduced in the third quarter of fiscal 2007, resulting in paid
weeks growth of 9.7% in fiscal 2007 to 12.8 million from 11.6 million in fiscal 2006, while attendance grew
modestly in 2007, up 1.9% versus the prior year.
In fiscal 2008, paid weeks grew 17.4% versus the prior year, on the strength of increasing Monthly Pass
penetration. Although the United Kingdom launched a new program in January 2008, full year meeting
attendance declined 2.4% versus the prior year. The UK market responded positively to its new program, but like
the North American market, the United Kingdom experienced a worsening economy over the course of the year
which negatively impacted meeting enrollment and attendance. Economic conditions worsened in 2009, although
effective marketing and promotional activity helped mitigate the negative trend. As a result, paid weeks
continued to improve, up 8.1% in fiscal 2009 as compared to the prior year, reflecting increased penetration of
Monthly Pass in that market, and attendance declined slightly, down 1.5% versus the prior year.
In fiscal 2010, paid weeks growth decelerated, bringing paid weeks nearly on par with the prior year, down
0.4% and meeting attendance in the United Kingdom was weak, declining 10.5% compared to fiscal 2009. As
with NACO, first quarter 2010 UK volumes were significantly impacted by weather and cycling against a
program innovation in the prior year. Absent a new marketing campaign in the spring to draw enrollments, the
United Kingdom continued to experience steep declines in attendance in 2010 versus the prior year, down 8.5%
in the second quarter and 9.4% in the third quarter. The United Kingdom launched its new program, ProPoints,
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