Weight Watchers issued an unexpectedly negative 2013 forecast on Thursday, dragging shares down 20% to $32.11.
"While we are working aggressively on both near-term commercial activities and longer-term strategic initiatives, 2014 will be a very challenging year," CEO Jim Chambers said in a statement.
The weight-management company said it expects memberships to continue to decline through the company's next financial year, contributing to a decline in revenue expected to reach as high as the low double-digits.
The New York-based company reported third-quarter earnings of $1.07 a share on revenue 8.5% lower than a year earlier of $393.9 million. Analysts surveyed by Yahoo! Finance had expected 84 cents a share on $386.5 million. Management said cost-cutting measures allowed the business to surpass third-quarter expectations but that the trend would not extend to the fourth quarter.
"To maintain financial flexibility and fund the company's transformation, the board has elected to suspend the dividend," said Chambers.
TheStreet Ratings team rates WEIGHT WATCHERS INTL INC as a Hold with a ratings score of C+. TheStreet Ratings Team has this to say about their recommendation:
"We rate WEIGHT WATCHERS INTL INC (WTW) a HOLD. The primary factors that have impacted our rating are mixed -- some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. Among the primary strengths of the company is its expanding profit margins over time. At the same time, however, we also find weaknesses including a generally disappointing performance in the stock itself, deteriorating net income and weak operating cash flow."