Close to 12 months ago, Weight Watchers International was given a big jolt by Oprah Winfrey when the media heavyweight agreed to purchase a stake of 10% in the weight loss company and to serve as one of the top promoters of the company’s services.
Winfrey’s investment worked quickly for the company. Within just weeks, the stock market reacted with a surge of 300% in the stock value with Winfrey making hundreds of millions of dollars on paper with her investment.
Through conversations, it became very clear tremendous alignment existed between the intentions of Oprah and the company’s mission, said Jim Chambers the CEO at Weight Watchers in October of last year.
He added that the company believes that Oprah’s incredible ability to inspire people into realizing their full potential has and will be a unique compliment to the company.
However, the high expectations of investors created by the stake Winfrey took in the company have nearly evaporated. Close to $1 billion in market valuation was erased at the company since the effect Oprah had peaked during late fall of last year.
Now, Chambers, who welcomes Winfrey with open arms, is leaving. On Monday, after the close of the market, Weight Watchers made an announcement that Chambers resigned as the company CEO and would be leaving the company before October 1.
The company also said it was beginning to look for his replacement. During the period the company is without a CEO, Nicholas Hotchkin the CFO and a pair of board members will be running the company, said the statement released by Weight Watchers.
Stock at Weight Watchers dropped 5.4% in after hours trading to $9.79 which is far below the $28 it was selling at last fall and just slightly more than $6.79, which is was trading at prior to the announcement of Winfrey’s partnership with the business.
Investors now are saying the company has a value of just over $600 million.
The financials for Weight Watchers have not benefited from the role Winfrey played at the company. Both its revenue and earnings were lower during the first two 2016 quarters than for the same periods the previous year.
As was the case for a number of years, the person at the heart of the company is Ray Debbane its chairman. His investment company owns close to half the stock at Weight Watchers.
However, Winfrey is the second largest company shareholder and Debbane emphasized on Monday that Winfrey is to play a role in helping to find the next CEO.