NEW YORK (AP) -- Weight Watchers International Inc. on Thursday named a new CEO and reported that its second-quarter net income fell 16 percent as the company took costs related to the early extinguishment of debt and recruitment trends remained weak.
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.
Second-quarter results beat analysts' expectations, but the company lowered its guidance for the year and shares fell 6 percent in after-hours trading.
President and Chief Operating Officer James Chambers will become CEO, effective immediately. He replaces David Kirchhoff, who is leaving to pursue other opportunities. Kirchhoff had been an executive with Weight Watchers for 14 years and had been CEO for nearly half of that time.
Chambers said current business conditions are "challenging" but added the company is on track with cost cuts.
Global engagement — measured by paid weeks per customer — fell 2.5 percent compared with a year ago.
"While I'm excited about the team's plans for the January 2014 campaign, the 2013 recruitment weakness means that we'll start 2014 with fewer active members and therefore a lower earnings base," Chambers added.
Net income for the three months ended June 29 fell to $64.9 million, of $1.15 per share. That compares with $77.5 million, or $1.36 per share, a year ago. Excluding costs related to the early extinguishment of debt, net income totaled $1.39 per share. Analysts $1.11 per share, according to FactSet.
Revenue fell 4 percent to $465.1 million. Analysts expected $457.4 million.
Meeting fees revenue fell 7 percent to $231.2 million, while product sales and other revenue fell 11 percent to $89.5 million. Revenue from weightwatchers.com rose 7 percent to $144.5 million.
For the fiscal year, the company now expects adjusted net income of $3.55 to $3.70 per share. That compares with prior guidance of net income of $3.60 per share to $3.90 per share. Analysts expect $3.73 per share.
Shares fell $3.53, or 7.5 percent, to $43.50 in aftermarket trading, after closing down 42 cents at $47.03. The stock has traded between $40 and $60.30 over the past 52 weeks.