AOL Money & Finance

Weight Watchers sees lighter sales in Q3

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Weight Watchers (WTW), the well-known provider of solutions to those who want to shed a few extra pounds, issued Q3 numbers on Tuesday. While losing inches is always a popular activity, that doesn't mean that the company will always see growth.

According to the corporate press release, Weight Watchers saw an 8% decline in net sales. Earnings per share came in at 68 cents on a diluted basis. That was only a penny better than the year prior. Management is certainly making the most of its revenues by keeping costs and expenses down, but it is obviously disappointing to shareholders when income expansion is dependent on belt-tightening.

Other problems are detailed in this Reuters article. The business needs to bring clients in, so it's doing a little promotional activity to heighten the profile of the services offered. Thing is, promotions cost money. This translates into a not-so-rosy outlook for the next quarter.

Shares of Weight Watchers are down this afternoon on the report. It looks like many investors want to take the bear case. The bull case, of course, centers on optimism for the promotion. Gathering new clients will hopefully reap top-line rewards in the future.

As far as I'm concerned, however, this stock isn't a very attractive one to own, either for the short or long term. If you check out a five-year chart over at AOL quotes, you'll note that the graphic lacks any significant quantity of hope and excitement.

Another thing to consider is the company's dividend history. If you're going to put up with a stagnant stock price, you at least need a rising dividend, correct? Well, don't look to this entity for such comfort.

Weight Watchers may indeed be a great place to go to in order to get in shape, but I'm not sure I'm a believer in the stock's ability to increase the health of my portfolio. I won't be putting this investment idea on my watch list anytime soon.

Disclosure: I don't own any company mentioned; positions can change without notice.

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Last updated: November 20, 2009: 06:13 PM

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