Weight Watchers CEO Resignation a Strategic Move?
CEO Jim Chambers' surprising decision may indicate that the board wants to find the appropriate person to oversee Weight Watchers' growth plans over the next several years.
In a surprise move,
The timing of Chambers' move is unusual, as it comes after Weight Watchers had been gaining traction with its "Beyond the Scale" platform, upgraded technology platform, and Oprah Winfrey-led engagement efforts, and also ahead of the important 2017 winter recruiting season. However, after speaking with management, we do not believe Chambers' decision has anything to do with performance--in today's release, Hotchkin reaffirmed he expects the current quarter will be the fourth consecutive quarter of year-over-year member growth--or changes in the company's long-term strategies. Instead, we believe the move had more to do with the board wanting to find the appropriate person to oversee Weight Watchers' growth plans over the next several years.
There is no change to our $13 fair value, no-moat rating, or Standard stewardship rating based on the announcement. While CEO departures and interim management appointments always carry some degree of executional risk, we believe the interim CEO group brings a nice balance between financials (Hotchkin), operations (Semmelbauer), and shareholder alignment (Sobecki) to keep the company's near-term objectives on track. As for what we expect from a new CEO, we expect an external candidate with meaningful experience in the health/wellness industry with a willingness to explore new uses of technologies and marketing solutions.
Morningstar Premium Members gain exclusive access to our full analyst reports, including fair value estimates, bull and bear breakdowns, and risk analyses. Not a Premium Member? Get this and other reports immediately when you try Morningstar Premium free for 14 days.