Shares of Weight Watchers Jump as Oprah Winfrey Takes a Stake - The New York Times - 0 views
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oprah winfrey takes shares weight watchers new york times economics
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Her show might be gone but the “Oprah Effect” clearly endures.
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After Oprah Winfrey said on Monday she would buy a 10 percent stake in Weight Watchers and take a seat on the board, the company’s slumping stock doubled to $13.92 per share, adding about $400 million to its market value
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Ms. Winfrey also plans to give Weight Watchers unfettered access to her name and face for marketing purposes.
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For years, Ms. Winfrey has helped make countless little-known brands wildly successful by endorsing them through one of the media ventures that made her a billionaire. But this is the first time she has made such an investment in a public company.
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This year, Weight Watchers announced plans to cut roughly $100 million in additional costs and laid off the president of its North American business.After 10 straight quarters of declining sales, the stock had slumped 73 percent, to $6.79 on Friday.
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Only one analyst out of eight had encouraged investors to buy shares of Weight Watchers. But that did not stop Ms. Winfrey.
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Her successful endorsement of products through her annual list of favorite things so often produced skyrocketing sales and popularity that the result was called the “Oprah Effect.” Spanx, an undergarment used to make women look slimmer, was on the list in 2000, giving the then-unknown product national fame and helping turn its founder, Sara Blakely, into a billionaire.
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Ms. Winfrey is expected to bring some major gravitas to Weight Watchers’ marketing department. She agreed to offer her name and face to Weight Watchers and no other weight-loss products for five years with the option to renew afterward, according to a filing with the Securities and Exchange Commission. The company already has a picture of Ms. Winfrey on its website home page.But it is unclear whether Ms. Winfrey’s backing can help Weight Watchers expand outside of its core demographic and attract younger users, according to R. J. Hottovy, an analyst at Morningstar.
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The company agreed to issue Ms. Winfrey 6.4 million shares of common stock for $43.2 million, with the option to purchase an additional 3.5 million shares, the regulatory filing showed.