Weight Watchers (WTW) Looks to 'Gain Weight' in Two Young Markets

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Weight Watchers (NYSE: WTW) is looking to produce more top- and bottom-line growth by shrinking the middle line on this relatively new market: men. Traditionally, about 90 percent of Weight Watchers members were women, leaving plenty of untapped potential on the table.

The company's recent move to sign NBA legend and golf flunkey Charles Barkley as its first male spokesperson seems to play right into this initiative.

Another untapped market is China. With U.S. companies like Yum! Brands (NYSE: YUM) and McDonald's (NYSE: MCD) continuing to bolster their presence in China, Weight Watchers is also looking for new product offerings to spark interest in the country.

The WSJ recently spoke with CEO David Kirchhoff about the moves. Some key points were made:

Although Weight Watchers launched "Weight Watchers for Men" a few years ago, the company was never fully assertive about expanding awareness for the product. The signing of Barkley -- who Kirchhoff says is "about as manly as anybody can possibly get" -- signals its okay for men to eat items like fruit and vegetables in an effort to slim down and get in better shape.
During the economic downturn of 2008-09, Kirchhoff said retention actually got stronger, but new enrollment suffered.
Its online business had a great year in 2010, and sales are up about 70 percent for the first three quarters of 2011.
Kirchhoff also said corporate backing which assists in subsidizing Weight Watchers meetings has actually increased amid the recession. The reason is healthcare costs and rising insurance premiums, and corporations are making stronger efforts to help their employees get fit.
For China, Kirchoff touted the rise in the middle class. Food consumption has become more diverse, and in larger quantities. Further, with China's one-child policy, there are two sets of grandparents focused on spoiling one child, as opposed to several grandchildren in the U.S.
About 1.4 million people per week attend meetings.
Online added about 1.8 million net subs in the first three quarters of 2011.

While no other data related to weekly meetings or total online subs was given, the growth is there. Shares of Weight Watchers moved 48.4 percent higher in 2011, and are up a staggering 23 percent in 2012.

Investors might want to keep an eye on Nutrisystem (Nasdaq: NTRI) and eDiets.com (Nasdaq: DIET) moving forward, both looking to take market share from Weight Watchers.

Opinions:

While Barkley is intimidating, Streetinsider.com is offering up the idea of getting Bear Grylls as a sponsor, and offering up some "survival meals." With delicacies like raw camel fat, turtle, and goat eyeballs, the proof is in the pudding. Pounds will be shed.

The biggest case for Weight Watchers not gaining traction is manliness itself; guys generally don't want to be told what to do, much less join the same fat-fighting program their wife/girlfriend/mother is on. Plus, men are more prone to getting stronger rather than trimmer, and hitting the weight room doesn't have a "points" system. Just iron.

Speaking of which, look at how Nutrisystem has fared over the last few years. The company hired multiple former athletes like Dan Marino and Don Shula, yet shares have been flat at about $10 to $20, coming off highs of $60 to $70 in 2007. Admittedly, though, Nutrisystem is different in that users have to order complete meals for the program, unlike simply eating whatever you want in moderation with Weight Watchers.

Will the focus shift work? Investors in Weight Watchers hope so as much as the participants in the program.

Shares are down about 1.7 percent Monday morning.

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