Weight Watchers Fires Thousands Over Zoom
WW International (WW) — formerly Weight Watchers — fired thousands of its employees last week over Zoom Video Communications (ZM). According to reports on HuffPost, the manager who fired the employees read from a script and had all participants muted so they couldn’t ask questions. Some employees who were fired had worked at the company for decades.
When asked about it, Nick Hotchkin, the chief financial officer for WW, said, ““It wasn’t practical to have all of the conversations be one-on-one.” Hotchkin added that employees had been encouraged to reach out to their managers for follow-ups after the Zoom meetings. WW International had over 17,000 full and part-time employees at the end of last year.
In late April, WW announced that it planned to shave $100 million in expenses due to a decline in revenue. In its last earnings report, WW noted that beginning in mid-March, the crisis started to negatively impact our recruitments and resulted in Studio closures. The report went on: “While we have seen some recovery, given the uncertainty around 2020 revenue levels, we are withdrawing our full year 2020 financial guidance.” However, the firm added, “We continue to be excited about our long-term growth opportunities with our digital platform.”
Before the pandemic hit, about a quarter of the company’s members were paying $44.95 a month for access to workshops, while the other three quarters paid $20.95 a month for WW’s app. The company has made its digital platforms even more of a priority as Covid-19 made in-person meetings impossible.
In June 2018, the stock of WW peaked at more than $102 a share. The stock closed on Friday at $25 a share. Analyst Christina Brathwaite at J.P. Morgan recently cut her stock price target to $12 from an already-Street-low of $14. Brathwaite said that data from SimilarWeb suggests fiscal first-quarter daily active users contracted 40% from a year ago, which she said would put “significant pressure” on revenue for the year.
Most other Wall Street analysts are more optimistic; WW has a Moderate Buy consensus and $29.25 price target, which represents 16% upside from today’s level. (See WW International stock analysis on TipRanks).