Nutrisystem 2006 Annual Report Download - page 5

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D
ear Fe
ll
ow Stoc
kh
o
ld
ers
,
Efforts to resurrect the NutriS
y
stem brand in 2003, and to turn around the compan
y
in 2004 and 200
5
, led t
o
a
nother
y
ear of exceptional performance in 200
6
. Our sin
g
ular focus on our customer over the past several
y
ears has
delivered a 193 percent compounded annual revenue
g
rowth rate since 2003, and record 2006 financial result
s
i
ncludin
g
a 167 percent revenue
g
rowth
y
ear-over-
y
ear and a 305 percent increase in net income to
$
2.29 per dilute
d
share.
H
ow
did
we ac
hi
eve t
hi
s extraor
di
nary growt
h
?T
h
roug
h
customer-
f
ocuse
d
expans
i
on an
d
mar
k
et
i
ng. Ou
r
ccomplishments in 200
fall into two main categories:
1. Customer Ac
q
uisition an
d
Reactivatio
n
T
he women’s market, our core customer se
g
ment, continued to perform well in 2006 due to enhanced media
m
arketin
g
efforts and a stron
g
referral business. Meanwhile, we launched our men’s wei
g
ht mana
g
ement pro
g
ram i
n
earl
y
2006 and it has since been a stron
g
driver of profitable
g
rowth. Our men’s channel
g
rew to rou
g
hl
y
30 percent o
f
our customer
b
ase
b
yt
h
een
d
o
f
t
h
e year. We
h
ave proven t
h
at t
h
e men’s we
i
g
h
t
l
oss mar
k
et,
l
ong neg
l
ecte
dby
commerc
i
a
l
we
i
g
h
t
l
oss compan
i
es, can
b
ecome a
l
arge opportun
i
ty
f
or Nutr
i
System
b
ecause o
f
our e
ff
ect
i
ve pro
d
uct,
a
nonymous
d
e
li
very p
l
at
f
orm, an
d
conven
i
ent, “no-
b
ra
i
ner” approac
h
to we
i
g
h
t
l
oss. T
h
e men’s we
i
g
h
t
l
oss mar
k
et
will
cont
i
nue to
b
ean
i
mportant
d
r
i
ver o
f
our
b
us
i
ness
i
nt
h
e years to come
.
We
h
ave a
l
so ac
hi
eve
d
great success
i
nt
h
e react
i
vat
i
on o
f
past customers across a
ll
segments. Custome
r
reactivation revenues
g
rew in excess of 2
5
0 percent in 2006, and reactivation will be a ke
y
area of focus
g
oin
g
f
orward
.
2. Mu
l
ti-C
h
anne
l
Mar
k
etin
g
T
o mirror our customer se
g
mentation strate
gy
, our marketin
g
model has become increasin
g
l
y
diverse. Toda
y
,
NutriS
y
stem advertises in more ma
g
azines, and on more television stations and web portals than ever before
.
Additionall
y
, we are able to profitabl
y
contact customers throu
g
h innovative direct mail, email and telemarketin
g
–bu
t
w
ith more ele
g
ance and diversit
y
than in
y
ears past
.
Th
e sum tota
l
o
f
a
ll
our a
d
vert
i
s
i
ng e
ff
orts – te
l
ev
i
s
i
on, magaz
i
ne,
di
rect ma
il
,te
l
emar
k
et
i
ng an
d
e-commerce
–
w
or
ki
n
h
armony to opt
i
m
i
ze pro
fi
ts. T
h
ese are
i
nter
d
epen
d
ent
di
sc
i
p
li
nes t
h
at a
ll
ow us to ma
i
nta
i
n a cons
i
stent an
d
p
ers
i
stent a
d
vert
i
s
i
ng presence an
d
exposure
f
or t
h
e Nutr
i
System
b
ran
d
w
h
en ot
h
er we
i
g
h
t
l
oss compan
i
es
h
ave
wi
t
hd
rawn
f
rom aggress
i
ve a
d
vert
i
s
i
ng.
O
verall, our customer acquisition and reactivation momentum, coupled with successful multi-channel marketin
g,
has continued to expand the profitabilit
y
and scalabilit
y
of our business. Lookin
g
ahead to 2007, our strate
gy
emphasizes the followin
g
:
•
Cont
i
nu
i
ng to expan
d
an
d
evo
l
ve eac
h
one o
f
our mar
k
et segments t
h
roug
h
except
i
ona
l
mar
k
et
i
ng, creat
i
ve
,
n
ew pro
d
uct an
d
promot
i
ona
l
o
ff
ers, an
d
pers
i
stent, targete
d
a
d
vert
i
s
i
ng. As an examp
l
e, we
i
ntro
d
uce
d
N
utr
i
System S
il
ve
r
™
in earl
y
2007, our pro
g
ram specificall
y
tailored for senior men and women, and ar
e
s
eein
g
solid
g
rowth in the number of older Americans startin
g
on the NutriS
y
stem pro
g
ram
;
•
Becom
i
ng even more a
d
ept at spea
ki
ng to an
d
react
i
vat
i
ng ex-customers, a
l
arge opportun
i
ty over t
h
e next
s
evera
l
years
;
•
Investin
g
in and launchin
g
new markets and new channels includin
g
our international business and corporat
e
p
artnershi
p
s; an
d
•
Constant
l
y
i
nnovat
i
ng. In
f
act, we’re a
l
rea
d
y wor
ki
ng on a new we
i
g
h
t
l
oss program
f
or 2008
.
A
t NutriS
y
stem, we are trul
y
excited about what we will accomplish in 2007. I thank our emplo
y
ees, mana
g
emen
t
team, and shareholders for their enthusiastic support of our vision and commitment to our
g
rowth.
Sincerel
y,
Michael J. Haga
n
Chi
e
f
Execut
iv
e
Offi
cer
Apr
il
200
7