NEW YORK, April 07, 2019 (GLOBE NEWSWIRE) -- Pomerantz LLP announces that a class action lawsuit has been filed against Weight Watchers International, Inc. (“Ferroglobe” or the “Company”) (NASDAQ: WTW) and certain of its officers and directors. The class action, filed in United States District Court, Southern District of New York, and indexed under 19-cv-02528, is on behalf of a class consisting of all persons and entities, other than Defendants and their affiliates, who purchased or otherwise acquired Weight Watchers between May 4, 2018 and February 26, 2019, inclusive (the “Class Period”) seeking to pursue claims under the Securities Exchange Act of 1934 (the “1934 Act”).
If you are a shareholder who purchased Weight Watchers securities during the class period, you have until May 3, 2019, to ask the Court to appoint you as Lead Plaintiff for the class. A copy of the Complaint can be obtained at www.pomerantzlaw.com . To discuss this action, contact Robert S. Willoughby at rswilloughby@pomlaw.com or 888.476.6529 (or 888.4-POMLAW), toll-free, Ext. 9980. Those who inquire by e-mail are encouraged to include their mailing address, telephone number, and the number of shares purchased.
[Click here to join this class action]
Weight Watchers offers a subscription-based weight loss program.
The complaint alleges that throughout the Class Period, Defendants made materially false and misleading statements regarding the Company’s business, operational and compliance policies. Specifically, Defendants made false and/or misleading statements and/or failed to disclose that: : (i) deceived the investing public regarding Weight Watchers’ business metrics and financial prospects; (ii) artificially inflated the prices of Weight Watchers securities; (iii) allowed Artal and certain Weight Watchers executives and insiders to sell more than a billion dollars of their personally-held Weight Watchers shares at fraud-inflated prices; and (iv) caused plaintiff and other members of the Class to purchase Weight Watchers securities at artificially inflated prices.
On November 1, 2018, after the close of trading, Weight Watchers issued a press release announcing its 3Q18 financial results. Weight Watchers reported that it had now lost another 300,000 subscribers in the quarter, bringing its subscriber count down to 4.2 million (from 4.6 million at the end of the 1Q18), causing the Company’s reported net revenues of $366 million to significantly underperform the $379 million Defendants had led the market to expect.
The Company also reported an adjusted net income of just $0.94 per share, while investors had been led to expect adjusted earnings of $0.99 per share on revenues of $365.8 million based on defendants’ bullish Class Period statements. Though Defendant Hotchkins tried to reassure investors that day that “[h]istorically, approximately 40% of [the Company’s] annual member recruitments have occurred during the first quarter,” and “[t]herefore, each year first quarter is [its] peak for end of period subscribers and each year end is [its] low point,” that only emphasized the problem. With average subscriber contracts lasting nine months, many, many more subscriptions would be lapsing during 4Q18, precisely when the Company would be signing on the fewest number of new subscribers. As such, the Company’s ability to retain four million subscribers at the end of FY18, much less meet its end-of-2020 goals of five million subscribers driving in excess of $2 billion in revenues, was greatly diminished.
On this news, the price of Weight Watchers common stock declined almost 30% from its close of $68.49 per share on November 1, 2018 and closing down at $48.13 per share on November 2, 2018.
On February 26, 2019, after the close of trading, Weight Watchers issued a press release and conducted a conference call with investors and stock analysts revealing the Company’s actual 4Q18 and FY18 results and financial prospects. The 4Q18 subscriber count had again declined down to 3.9 million subscribers. Defendants finally conceded that enrollment would continue declining during FY19, with Defendant Grossman revealing that while January is typically the best time for health-focused brands and when 40% of new subscribers typically join due to New Year’s resolutions, January 2019 had been a “hard month” for Weight Watchers. The Company said that it was now only targeting revenues of $1.4 billion during FY19, nowhere near the $2 billion in annual revenues it had been projecting to achieve by the end-of-2020 and well below the nearly $1.7 billion it had led the market to expect for FY19. Weight Watchers also disclosed that it was now only targeting EPS of $1.25 to $1.50 per share for FY19, far lower than the EPS of $3.36 defendants had led the market to believe even following its prior misses in August and November 2018.
During the conference call, Defendant Grossman acknowledged that the “January time period [was] such a critical component of [the Company’s] recruitment for the year,” emphasizing that she finally “had to be realistic and transparent about what that meant for the balance of the year,” when issuing the dour FY19 guidance.
In response to this news, the price of Weight Watchers common stock declined from its close of $29.57 per share on February 26, 2019, to close down at $19.37 per share on February 27, 2019, on unusually high trading volume of more than 37.4 million shares trading.
The Pomerantz Firm, with offices in New York, Chicago, Los Angeles, and Paris, is acknowledged as one of the premier firms in the areas of corporate, securities, and antitrust class litigation. Founded by the late Abraham L. Pomerantz, known as the dean of the class action bar, the Pomerantz Firm pioneered the field of securities class actions. Today, more than 80 years later, the Pomerantz Firm continues in the tradition he established, fighting for the rights of the victims of securities fraud, breaches of fiduciary duty, and corporate misconduct. The Firm has recovered numerous multimillion-dollar damages awards on behalf of class members. See www.pomerantzlaw.com
CONTACT: Robert S. Willoughby Pomerantz LLP rswilloughby@pomlaw.com 888-476-6529 ext. 9980
