The combination of an asset-light business model and a strong brand can be tremendously powerful, and Weight Watchers (NYSE:WTW) clearly has the sort of returns on capital that bespeak a quality business. Unfortunately, operational stability has proven elusive and the company's decision to launch a large buyback is going to stretch an already stressed balance sheet even further. (For related reading, see A Breakdown Of Stock Buybacks.)
A Slightly Soft Fourth Quarter
Although Weight Watchers' reported fourth quarter results were OK, they were not as strong as the sell-side projected. Sales grew almost 13%, but were a a bit shy of expectations despite being around a 60% jump in online revenue. Total paid weeks did climb nearly 34%, though, and North America's meeting revenue rose about 8%.
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