Weight Watchers International, Inc. F2Q09 (Qtr End 07/04/09) Earnings Call Transcript

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2009-08-06 19:30:43.0

Tags: Call Transcript, Retention, Earnings, Weight Watchers International Inc., Financial Accounting, Finance, Seeking Alpha

Question-and-Answer Session

Operator

(Operator Instructions) Your first question comes from Robert Craig - Stifel Nicolaus.

Robert Craig - Stifel Nicolaus

I was wondering if you could review penetration rates by geography with Monthly Pass.

Ann M. Sardini

Looking at NACO it's roughly 60%. In the U.K. we're up to 52%. And in Germany and France, we're close to 70%.

Robert Craig - Stifel Nicolaus

Are you able to quantify at all, or you mentioned earlier that retention was improved, any way to quantify that for us?

David P. Kirchhoff

We have not reported those types of retention metrics on past calls and so that's not something I think that a level of detail on the volumes that we would be getting into, other than to say that I would characterize the retention improvements we've seen, particularly in NACO, as slight improvements in retention, but I think considering the trends that we have been seeing, where I think we've been reporting on the past several calls, that we've been seeing a little bit of softening versus prior-year periods, beginning in Q3 going into Q4, then in Q1. The fact that that then reversed a little bit in the positive territory, we thought was very good news.

Robert Craig - Stifel Nicolaus

Is it possible to provide any color on the nature of some of the promotions that are being considered for the NACO market?

David P. Kirchhoff

For competitive reasons, we're not revealing the exact nature of the promotion. For obvious competitive reasons I should say. What I can say and what you can certainly interpret from my remarks, is obviously it is in the form of a discount. I think the way that you can think about, or approach, the promotions, is consider the fact that an average retention for Monthly Pass is about 8 months. And that the overage retention for Weight Watchers Online is about 9 months.

Also consider the fact that our challenge has been to try to push sort of that marginal, undecided consumer over the edge and to get them to start a weight-loss effort. And so therefore, the approach would be to try to find a way to give them an extra inducement to start as opposed to doing any discounting sort of further down their enrollment cycle.

And so, from that point of view, the nature of this is that it would be the kind of discount program where it would be around the inducement of getting people started as opposed to sort of ongoing. Also, reflecting the fact that our retention has held up very well.

 

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