Pockets are getting fatter at
Weight Watchers International
, as the provider of dieting services reported a rise in earnings Tuesday. But investors aren't hungry for its shares.
The company said its profit was boosted by strong sales of its new weight-loss products and by increased attendance at its meetings. But despite the seemingly encouraging news, shares tumbled $4.51, or 9.3%, to $43.89 on the Big Board, marking a 12% decline for the shares since they hit an all-time high of $50.39 on Oct. 24. Rumors circulating on trading floors about a possible downgrade from Credit Suisse First Boston may have contributed to the stock's decline.
The Woodbury, N.Y.-based company posted third-quarter net income of $36.8 million, or 34 cents a share, up from $15.7 million, or 14 cents a share, in the year-ago quarter. Excluding unrealized gains and losses related to foreign currency-denominated debt, Weight Watchers said it earned $38.6 million, or 35 cents a share. Analysts were expecting the company to post a profit of 32 cents a share, according research firm Thomson Financial/First Call.
Revenue for the quarter rose 31% to $189.2 million from $144.1 million last year. Worldwide attendance at company-owned operations grew 18%, while worldwide product sales jumped 44% due to higher meeting attendance in North America and the launch of its Points Plus plan in Europe.
Looking forward, Weight Watchers said it is currently "on track" to deliver 2002 earnings of $1.30 a share, a penny higher than the analyst consensus. The company also said it remains comfortable with analysts' 2003 range of earnings estimates of $1.54 to $1.65 a share.
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