Shares of Weight Watchers International Inc. (WTW) tumbled by $20.36 -- or nearly 30% -- to close Friday at $48.13 after the weight-management company saw its subscribers continuing to decline and the company missed third-quarter sales expectations.
The company, which recently changed its name to WW, posted third-quarter net income of $70.1 million, or $1 per share, up from $44.7 million, or 65 cents, a year ago. Revenue totaled $366 million, up 14% from a year ago, but missed analysts' expectations of $379 million.
The company said it ended the third quarter with 4.2 million subscribers-- up 25% year over year, but that number fell from 4.6 million subscribers in the first quarter and 4.5 million in the second quarter.
"Historically, approximately 40% of our annual member recruitments have occurred during the first quarter," Chief Financial Officer Nicholas Hotchkin said during a conference call with analysts. "Therefore, each year first quarter is our peak for end of period subscribers and each year end is our low point."
Hotchkin added that "subscribers that come in at year end show up in our End of Period Subscriber metric but the real impact in terms of their financial contribution isn't realized until the next fiscal year."