Weight Watchers International Inc. Chief Executive Officer Jim Chambers is stepping down after his attempt to turn around the weight-loss company failed to gain traction, even with a high-profile endorsement from Oprah Winfrey.
Weight Watchers will be run by a trio of executives after the 58-year-old Chambers leaves the company on Sept. 30, according to a statement on Monday. Winfrey, who serves on Weight Watchers board, will help pick the new CEO, the New York-based company said.
The move follows an uneven comeback bid by Chambers, who managed to boost subscriber rolls but disappointed investors with financial results. It also remains to be seen how much Winfrey can bolster the company’s fortunes. Weight Watchers’ stock rallied last year when the media magnate agreed to invest in the company and act as a spokeswoman, but its most recent sales missed analysts’ estimates. The company’s revenue and net income have declined in every year since Chambers became CEO in 2013.
The shares fell as much as 9 percent to $9.43 in late trading following the announcement. Weight Watchers already had dropped 55 percent this year through the close of regular trading on Monday.
Interim Office
An interim office of the CEO -- consisting of finance chief Nicholas Hotchkin, board member Christopher Sobecki, and former Chief Operating Officer Thilo Semmelbauer -- will lead Weight Watchers for now. As part of the changes, Semmelbauer also has been elected to the board.
Weight Watchers announced its deal with Winfrey in October, when she bought a 10 percent stake in the company and received options for an additional 5 percent. The stock, which had been hammered by years of losing subscribers, more than doubled in a single day.
Since then, Winfrey has tweeted about her weight loss and released a video that featured a surprise appearance at a Weight Watchers member meeting in New York. The company also plans to use Winfrey as part of its marketing campaign this winter season, when potential customers start dieting because of New Year’s resolutions.
New North American subscribers, a key measure for the company, grew 9 percent in the second quarter. That prompted Chambers to say Weight Watchers was making progress on its turnaround plan.
Debt Load
But it still faces long-term hurdles, including the rise of free fitness apps and changing attitudes about wellness and weight loss. Weight Watchers also has about $2 billion in debt. The company repaid a $144.3 million first-lien term loan in April, helping alleviate concerns about a default.
The challenge for the next CEO will be using Winfrey’s halo to generate better results.
“We remain confident we will deliver revenue and earnings growth in 2016,” Hotchkin said in Monday’s statement. “We are posted to enter 2017 with a revenue and earnings tailwind.”
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