Oprah effect? Weight Watchers shares rally on upbeat outlook

Weight Watchers shares shot higher in extended trading after the company that has partnered with media mogul Oprah Winfrey lifted its full-year earnings outlook and reported solid subscriber growth.

Shares in the New York-based company surged more than 13 per cent to $24 after the purveyor of diets and weight loss advice lifted its full-year earnings outlook to a range of $1.40 to $1.50 a share, compared with its previous guidance for $1.30 to $1.40.

The move came as Weight Watchers said its end of period subscribers rose 16 per cent in the first quarter compared with the year ago, noting growth in all major geographic markets. Meeting subscribers had grown 10.7 per cent, while those online, rose 20.1 per cent from a year ago.

Net revenues rose 7.2 per cent from a year ago to $329.1m, above analyst estimates of $323m.

The company, which counts Ms Winfrey as its third largest shareholder, also swung to a profit of $10.7m or earnings of 16 cents a share in the three months ended on April 1, compared with a loss of $10.8m or 17 cents a share in the year ago period. That topped Wall Street estimates of earnings of 5 cents.

The company, which grew from a gathering of friends in the Queens home of founder Jean Nidetch in the early 60′s, had been struggling to revive subscriber growth as Americans began to shift away from diets to healthier and more wholesome diets and incorporating fitness into their routines.

Weight Watchers then teamed up with Ms Winfrey who had openly discussed her struggles with weight loss on the hit Oprah Winfrey show over the year. The company also appointed Mindy Grossman its new chief executive starting July after announcing the departure of its chief executive James Chambers last year.

Weight Watcher’s shares are up more than 85 per cent so far this year.