There’s no assurance a new CEO will turn the tide for Weight Watchers International, Inc. (NYSE:WTW). But after three years at the helm and WTW stock hitting multiyear lows, there’s no denying it was time to at least try something else.
So Weight Watchers CEO James Chambers is stepping down at the end of this month, and the hunt for a replacement is underway.
Owners of WTW do have an unusual circumstance to chew on, though, and that is the involvement of bigger-than-life Oprah Winfrey.
Not only is she a spokesperson for the weight-loss company, she also owns 10% of all WTW stock, which gives her a seat on the Board of Directors. And it’s been made clear she’s going to have a hand in selecting the next CEO. The question is, what makes her qualified to contribute to that process?
Time for a Change
Calling a spade a spade, Weight Watchers has been in trouble for years now. Sales have fallen every year from 2012’s peak of $1.83 billion to last year’s $1.16 billion. Income has followed suit, quarterly losses recently becoming the new norm.
Blame it on NutriSystem Inc. (NASDAQ:NTRI) and Medifast Inc (NYSE:MED), at least partially. Mostly, blame it on dozens of low-cost and even free smartphone apps that help consumers count calories, along with an evolution of healthy eating know-how. The industry is becoming more fragmented rather than less, and informed individuals can do for themselves what they previously needed Weight Watchers to do for them.
To that end, while James Chambers proved himself a very capable manager of broad food lines during his time with Cadbury and Nabisco, weight loss is a different game. He’s either going to make it work, or not. It didn’t work, at least under him. The next chief my fare no better, but owners of WTW stock at least deserve to find out for sure.
Confusing Celebrity With Experience
It isn’t clear as to what degree it was mere name-dropping or to what degree it’s a meaningful factor. However, media mogul and major WTW shareholder and director Oprah Winfrey has been pegged as one of the people that will help select the next Weight Watchers CEO.
As a member of the board of directors, this is one of her inherent roles. On the one hand, the media may have simply use this aspect of the job to bolster headlines. On the other hand, her celebrity influence doesn’t necessarily fade inside the boardroom. She’s easily the most recognizable name on the board of directors, and she’s the company’s second-biggest shareholder.
When it’s all said and done, she’s likely to have the final say in the matter.
And that brings up an interesting question: Should celebrity influence be wielded in a boardroom, particularly when choosing a new CEO of a struggling company?
To be fair, Winfrey has earned the right. She’s a board member because she’s a huge shareholder, and she bought her stake with her own money, which she earned creating her own multi-billion dollar media enterprise. Clearly she’s got a more legitimate level of business acumen than, say any of the Kardashians, who are famous (and presumably wealthy) for nothing other than being famous.
Still, Weight Watchers is an analog company in a digital world, in need of a mercy killing as opposed to a mere overhaul. Oprah Winfrey may be a television and media expert, but her task at hand is still mostly unfamiliar territory to her.
For that matter, the rejuvenation of Weight Watchers is going to be an unfamiliar task to anyone who takes the helm. It’s going to require getting people off their digital devices and wiping away what those consumers have learned for themselves about diet and exercise.
That’s not going to be an easy feat.
As off-putting as the idea of unmerited celebrity influence in a boardroom may be, in this case, it shouldn’t be a concern. Were it another name like Justin Bieber, Miley Cyrus or Kanye West, it might be a different story.
Winfrey is eating her own cooking, though, in that she’s got her own money on the line. At 62 years of age, she’s got enough life experience and business experience to know what she doesn’t know, and to read people correctly.
The bigger concern for owners of WTW stock should be the aforementioned challenge … a plethora of alternative weight-loss tools and options, many of which are free to use. Whoever the next chief is, if Weight Watchers can be saved, it’s going to take a massive paradigm shift for the organization.
Shareholders may want to brace themselves for the possibility that the company is becoming increasingly obsolete, following in the steps of the pay phone, the video rental store and typewriters.
Oprah’s not going to change that reality no matter who she likes as the next CEO.
As of this writing, James Brumley did not hold a position in any of the aforementioned securities.