WeightWatchers 2013 Annual Report Download - page 4

by Baylor College of Medicine further
underscored this efficacy, concluding that
participants who joined Weight Watchers lost
more weight than people who were given
information about weight loss and then left
to figure out a path forward on their own.
Additionally, the study found that among
those participants who engaged with Weight
Watchers across multiple touch points – for
example, attending meetings and using online
and mobile tools – the success rate was even
higher. In short, the more touch points, the
better the result. Science continues to support
our belief that, for most people, the combination
of enabling tools and expert support is most
correlated with weight loss success.
While our combination of tools and support has
enabled Weight Watchers to retain its global
leadership position, we are feeling the effects
of a rapidly changing competitive environment.
Overall, consumer needs for our category
have not changed, but the way the consumer
perceives how these needs can be met is
evolving significantly, as fitness monitors and
free weight management tools have increased
their market penetration. We know we need to
adapt and innovate our offerings in order to be
more competitive. Looking back, 2013 was a
challenging year for the Company, with financial
results falling short of our expectations. While
our business remained profitable, generating
high cash flow and strong ROI, full-year revenue
declined six percent to $1.7 billion, and adjusted
EPS was $3.87 compared to $4.16 in 2012. We
do not find this performance acceptable, and in
late 2013 we began implementing change as
part of a multi-year transformation plan. We
are moving to revitalize top-line growth through
innovative and aggressive initiatives to close
the gap between our market potential and our
performance. While we have a lot of hard
work ahead, our powerful brand, dedicated
colleagues and significant resources give us the
confidence that we will return our Company
to sustainable growth. Our strong leadership
team, operating with a sense of urgency, has
defined four strategic pillars in our go-forward
transformation plan.
The first pillar is driving immediate performance
improvement – a near-term focus on top-line
improvement coupled with disciplined cost
management. Facing a challenging 2014,
we are taking quick and decisive actions
throughout our organization: making our
structure more nimble and improving our ability
to adapt to market changes. We have already
made good progress in flexing down our cost
structure, making it more variable and aligning
it better with our top-line performance. In fact,
we are well on our way to achieving a run rate
of $150 million in gross annualized savings by
the end of 2014. At the same time, we have
been optimizing our marketing strategies and
advertising creative to achieve the right balance
of effectiveness and efficiency.
The second strategic pillar is re-imagining our
consumer offering. To maintain our leadership
position and return to growth, we need to