Morningstar | WW’s Acquisition/Retention Adjustments Reinforce Our Long-Term Growth and Profitability Assumptions
While WW got off to a tough start in 2019 amid self-inflected (WW brand transition and winter marketing campaign issues) and competitive substitute (keto) issues, we've been encouraged by recent steps the firm has taken to differentiate its platform from calorie-counting mobile apps, activity monitors, and weight management solutions. In particular, we believe it is taking necessary steps to incorporate personalized and on-demand offerings by integrating its in-person, online, and mobile platforms. WW's "Beyond the Scale" platform integrates features like SmartPoints (which puts an emphasis on eating leaner proteins, fruits, and vegetables), Connect (a social media tool giving users access to Weight Watchers community members), and WW Rewards (a platform integrated into its mobile app that rewards healthy member behavior).We also see potential in CEO Mindy Grossman's efforts to reach more consumers beyond its traditional over-50 female demographic by positioning WW as a lifestyle brand focused on a more holistic approach to health/wellness. These include new programs targeted at teens, the Invite a Friend initiative, social media approaches that allow consumers to interact with the brand without being members, and partnerships with meal-kit provider Blue Apron and meditation platform Headspace. While ambitious, we also appreciate WW's goal to be the "everything app for health and wellness," including potential partnerships to encourage greater physical activity (beyond its existing FitPoints platform) and general wellness (including new opportunities in travel and leisure). In our view, these plans should lengthen the average member stay beyond the current nine-month-plus duration.However, we still harbor concerns that mobile apps and other technologies have commoditized aspects of the weight-management category. Though we don't see WW's clinically proven platform as a commodity product in an industry rife with false claims, we believe a host of substitute programs make it difficult for consumers to distinguish Weight Watchers' in-person and online businesses from new rivals, potentially influencing the brand's pricing power.Weight Watchers International is a wellness company and provider of commercial weight management program. The company's Weight Management Program and Plan is comprised of a range of nutritional, activity, behavioral and lifestyle tools and approaches, and includes its food plan, known as SmartPoints. The company's services and products include meetings conducted by the company and its franchisees, digital offerings provided through its websites, mobile sites and apps, consumer products sold at meetings and through the company's websites, licensed and endorsed products sold in retail channels and magazine subscriptions and other publications. The company provides subscriptions for its plans for meetings and online subscriptions.
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Morningstar provides data on approximately 530,000 investment offerings, including stocks, mutual funds, and similar vehicles, along with real-time global market data on more than 18 million equities, indexes, futures, options, commodities, and precious metals, in addition to foreign exchange and Treasury markets. Morningstar also offers investment management services through its investment advisory subsidiaries and had approximately $185 billion in assets under advisement and management as of June 30, 2016.
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