Weight Watchers Falls on ‘Challenging Year’ Ahead

Weight Watchers is feeling the squeeze.

The weight-loss program operator warned that next year will be “challenging” as customers dwindle, and it suspended its dividend. Shares slid in extended trading Wednesday.

Fewer people have been signing up for Weight Watchers programs, and the company faces a slowdown in its online business as it contends with increased competition from free social apps.

“While we are working aggressively on both near-term commercial activities and longer-term strategic initiatives, 2014 will be a very challenging year,” said CEO Jim Chambers. He said the dividend has been suspended, saving about $39 million, so the company can “maintain financial flexibility” and fund business changes.

In the third quarter, net income fell 10.5 percent, to $60.3 million, or $1.07 per share. In the July-September period last year, Weight Watchers earned $67.4 million, or $1.20 per share. The company said cost-cutting helped it beat its profit expectations.

Revenue fell 8.5 percent to $393.9 million, as weekly meeting fees shrank 11 percent to $198.7 million. Internet sales edged up 1 percent to $125.5 million — slower than the nearly 7 percent gain in the second quarter.

Weight Watchers International Inc. said it expected revenue in the last three months of the year to fall by a low double-digit percentage.

The company raised its profit outlook for the year to between $3.85 and $3.95 per share, up from between $3.55 and $3.70 per share. The revised projection excludes a one-time charge worth 24 cents per share tied to the company’s April 2013 debt refinancing.

Shares of Weight Watchers International Inc. dropped $4.70, or 12 percent, to $35.22 in after-hours trading. The stock has slid 24 percent this year.