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Operator
Ladies and gentlemen, welcome to Weight Watchers International's first quarter 2011 earnings teleconference call.
During the presentation, all participants will be in a listen-only mode.
Afterward, you will be invited to participate in a question-and-answer session, and instructions will be given at that time.
As a reminder, this conference call is being recorded today, May 6, 2011.
At this time, I would like to turn the call over to Sarika Sahni of Weight Watchers International.
Please go ahead.
- IR
Thank you to everyone for joining us today for Weight Watchers International's first quarter 2010 conference call.
With us on the call are David Kirchhoff, Present and Chief Executive Officer, and Ann Sardini, Chief Financial Officer.
At about 7 AM Eastern time today, the Company issued a press release reporting its financial results for the first quarter of fiscal year 2011.
The purpose of this call is to provide investors with some further details regarding the Company's financial results as well as to provide a general update on the Company's progress.
The press release is available on the Company's corporate website located at www.weightwatchersinternational.com.
Reconciliations of non-GAAP measures disclosed on this conference call to the most directly comparable GAAP financial measure are also available as part of the press release.
Before we begin, let remind everyone that this call will contain forward-looking statements.
Investors should beware that any forward-looking statements are subject to various risks and uncertainties that could cause actual results to differ materially from those discussed here today.
These risk factors are explained in detail in the Company's filings with the Securities and Exchange Commission.
Please refer to these filings for a more detailed discussion of forward-looking statements and the risks and uncertainties of such statements.
All forward-looking statements are made as of today, and except as required by law, the Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise.
I would now like to turn the call over to Mr.
Kirchhoff.
Please go ahead David.
- President and CEO, Director
Good morning.
Thank you for joining us as we review Weight Watchers International's performance for the first quarter of fiscal 2011.
Benefiting from a powerful combination of effective marketing, extensive PR coverage, and a strong new program launch, Weight Watchers enjoyed excellent Q1 results.
We saw robust enrollment levels in all of our English-speaking markets and our WeightWatchers.com business reached new heights with surging sign-up volumes, particularly in the US.
This more than compensated for our anticipated soft results in our Continental European business.
Before a review our numbers, it is important to note that our year-over-year operating results benefited from comparing to a weak Q1 in 2010.
On a constant currency basis, Q1 2011 revenues grew 28% over the prior year period with meeting fees up 22% and meeting product sales up 25% and Internet revenues growing 65%.
This increase compares very favorably to the 16% total revenue growth we saw in Q4 of 2010.
From a volume perspective, combined global online and meeting paid weeks grew by 40% in the first quarter 2011 versus the prior period.
This 40% growth was a clear acceleration over the 13% growth rate we enjoyed in Q4 of 2010.
Q1 2011 paid weeks for our global meetings business grew a robust 23% versus the prior-year quarter.
Paid weeks for our Weight Watchers online product grew by an unprecedented 72% versus the same period last year.
Q1 2011 EPS was $1, compared to $0.58 for the same period in 2010, the growth rate was 73%.
I will now briefly review our results in our major geographies and business units.
First, our North American meetings business.
Total NACO revenues, which includes the US and Canada, were $262 million in Q1, 2011, up 34% on a constant-currency basis versus the same period in 2010.
Suffice it to say, this is the strongest growth we have seen in NACO in many years, and it represented a clear acceleration over the trend in Q4 of last year.
NACO meeting fees grew by 32% in Q1 2011 versus the prior year period, entirely driven by volume growth.
And meeting product sales grew by 46% versus a prior year quarter, driven by volume growth and robust health of enrollment products.
NACO Q1 2011 paid weeks and attendances both crew at 33% versus the prior year period, driven by a higher active base of members flowing into the quarter, and strong enrollment throughout the quarter.
Enrollment levels in the quarter were not only up significantly versus Q1 2010, but were also significantly above 2009 levels.
Importantly, enrollments up never members in the quarter were also substantially higher than 2010 and 2009.
Early last year we began to implement our strategy to reenergize our brand in the US.
It is important to share the sequence of steps we undertook which helped to drive our strong volume performance in Q1.
First, we refocused our message on our brand's core strength, authenticity.
After a very weak Q1 2010, we took a new and more aggressive approach to raising the visibility and vitality of our brand in the marketplace.
Beginning April 1, 2010, we began to execute our strategy of showing the Weight Watchers brand in a new and much brighter light.
As a first step, we launched a new campaign featuring Jennifer Hudson, who shared her success as a Weight Watchers member, and followed this with the stories of other members and Weight Watchers online subscribers.
The authenticity of their stories and experiences with our lifestyle-based approach clearly resonated with the public.
As a result, we saw gradually-building strength and enrollments and meetings and surging growth in our Weight Watchers online business throughout Q2, Q3, and then into Q4.
Second, we launched a major new program.
With the re-energized brand and a foundation beginning to form, we then launched the new PointsPlus program in 2010, at the end of November.
This new program capitalized on 10 years of advanced nutritional science while building on the strong equity of points, completely revamping our highly successful program of 13 years and rebuilding the points plan from the ground up.
While base on the familiar methodology of budgeting and tracking, this new program much more directly encourages and nudges our members to make healthier and more satisfying choices.
Despite the lack of advertising at that time, the program innovation launch gained considerable buzz, largely benefiting from strong press coverage at both the national and local level.
As a result, we saw significant growth in both never members and rejoining members in our meeting business throughout December 2010.
Third, ignition.
Beginning December 27, we launched a new advertising campaign featuring Jennifer Hudson along with several other Weight Watchers members who all had terrific success as beta testers in the PointsPlus program.
Recognizing the strength of the advertising campaign and the buzz around the new program, we increased our immediate weight in January by over 15% versus the prior year period.
This advertising campaign, combined with the already strong buzz around the brand coming in from December resulted in full ignition for both the meetings business and the brand during the all-critical month of January.
Finally, we sustained our presence.
The strength and visibility around the brand continued at a sustained level throughout Q1 as a result of both advertising and PR coverage.
Jennifer Hudson enjoyed significant media attention over her weight loss success and her talent.
And, she enjoyed exposure at key events including both the Grammys and Oscars.
Further, she had the opportunity to demonstrate her success on the Oprah show in February.
Even better, the Oprah show showcased the success of her extended family, who are also following Weight Watchers, and as of February had lost a collective 1000 pounds.
Finally, taking advantage of the late Easter, we also extended our TV presence to two additional Q1 weeks beyond our typical campaign period.
The cumulative effect of all of the above was strong enrollment growth in every one of the quarter.
For the last few years, the growth of our NACO business has been constrained by the declining levels of never member of enrollments.
We finally saw a complete and full reversal of that trend in Q1 of this year.
In fact, never member enrollment growth in Q1 2011 was actually somewhat higher than rejoining member enrollment growth.
This was certainly not the case in our program launch in Continental Europe last year.
We believe that the growth of never member enrollments in Q1 2011, was a clear indication that our new communication strategy is working, and that the Weight Watchers brand had gained significant social currency in the minds of the public to levels not seen in many years.
For my prior calls you may recall that throughout 2010,the NACO management team took steps to consolidate its meeting network to allow us to focus our energies on our strongest locations, leaders, and time slots.
As a result, our meetings network, excluding our at work meetings, was 12% smaller Q1 2011 than in the prior year quarter.
The combination of this plus 33% attendance growth in Q1 2011, resulted in meetings that were on average, 50% busier than in the prior year period.
We saw average meeting attendance at their highest level since 2003.
This resulted in vibrant, bustling meetings, more commission for service providers, and set the stage for gross margin improvement for the NACO business.
We continue to be pleased with the adoption of the PointsPlus program in the NACO meetings business.
Weight loss results have been good despite the newness and inevitable transition challenges associated with a program change of this magnitude.
Similarly, NACO monthly pass retention was consistent with the prior year period.
Anecdotally, we continue to see numerous examples of our members leveraging the new program to make more helpful choices in their daily lives more consistently.
Our new program seems to have finally accomplished what none before was able to.
Get Americans to eat more fruits and vegetables.
Our opportunity now is to seek ways to build on the early word-of-mouth to continue the buzz of this important new program platform.
With regards to Q2 2011, Easter came three weeks later this year, so we have not yet completed the second week of our 2011 spring marketing campaign.
We are now comping against the launch of our new marketing strategy; therefore, we would not expect volume growth for the remaining quarters of the year to come close to the explosive results we saw in Q1.
Nonetheless, based on the strong Q1 recruiting trends and the very early, positive data from our spring campaign, as we look at the remaining three quarters of the year, we expect paid weeks growth in percentage terms in the low 20s, and attendance growth in the mid teens.
This would translate to full-year paid weeks growth in the 20s, and attendance growth in the high teens to low 20s.
Now, onto the international meetings business.
Like NACO, the UK entered the new year with both a new program innovation, Pro Points, and a new advertising campaign.
As a result, in Q1 this year, the UK saw significant growth in its meeting business.
As a reminder, the UK had a particularly weak Q1 in 2010 due to extremely bad weather in the first two weeks of the year last year.
Q1 2011 meetings business revenues grew 29% on a constant-currency basis, with meeting fees up 29% and in-meeting product sales up 33% versus the prior year period.
Both attendances and paid weeks were up 22%.
For the full year, we expect the UK to continue to see good volume trends in the business.
Due to the timing of Easter and the Royal wedding, it is important to note that the UK spring campaign got off to a four-week later start than compared to 2010.
This will have a negative impact on Q2 volume trends versus Q1, but we nonetheless expect very solid results for the full year in line with mid teens paid weeks growth in percentage terms and low teens attendance growth.
Moving on the continental Europe.
As expected, our continental Europe meetings business had a tough first quarter as a result of lapping the ProPoints innovation launch of last year.
Overall, the CE meetings business revenues contracted 16% on a constant currency basis in Q1 versus the prior year period, driven by softer volumes.
Paid weeks for the first quarter 2011 declined by 13%, compared to prior, while attendances declined 27%.
As we shared on prior calls, the CE business launched its new program in Q1 of last year.
The marketing programs surrounding the launch were not able to grow it never member meeting enrollments, but were successful in growing rejoining members enrollments.
This resulted in a temporary bump in volume in Q1 and Q2 of last year that did not sustain throughout the rest of 2010.
This, combined with soft enrollment volumes in Q1 of this year, drove our weak performance, as we had no product is to repeat the recruitment drive of rejoins.
Given all of the success of our NACO business in attracting never members, we are aggressively looking to benefit from the learnings of that market, and apply them to our CE meetings business.
Currently, the CE teams are working on a significant version upgrade to the current Pro Points program that will give that market much-needed product news.
We believe that this news, combined with more effective advertising and PR will allow us to return volume growth to this important region as we move into 2012.
As we continue into the year, we expect these negative meeting enrollment trends to begin to moderate, following the hump of Q1 and Q2, 2010 rejoins.
We expect paid weeks and attendance trends improve throughout the year.
Further, we are already starting to see strengthening volumes in our online subscription sales in CE, which we take as a very good early indicator of recovering brand strength.
Moving on to WeightWatchers.com.
The WeightWatchers.com business had its strongest quarter by far in its 10-year history.
Q1 Internet revenues of this highly profitable business were up 65% on a constant-currency basis versus the prior-year period, building on the plus 32% revenue growth we saw in Q4 2010.
Paid weeks for the Weight Watchers online product were up 72% for the quarter, the first-quarter 2011, versus the prior year quarter, and end of period active online subscribers were up 87%.
We ended the quarter with 1.8 million active subscribers, versus just under 1 million at the end of Q1 2010.
We saw a robust growth in sign-ups in the UK and Australia, which benefited from new program launches.
Despite some of the challenges of CE, we saw double-digit growth in that region as well; however, the highest growth rates by far were in the North American region where we saw historic growth rates, despite online, being a relatively more mature product in this market.
The combination of greater media weight, highly effective advertising, brand buzz, and a new program innovation all combined to create a compelling growth opportunity in our largest market, North America.
We find this particularly encouraging, as we have not yet begun to advertise Weight Watchers online nearly as aggressively in our international markets, creating a nice additional growth opportunity for this product in 2012.
We're using the strength of the results in this business to invest back into product development and growth.
By way of example, we recently expanded our mobile footprint with the launch of a beta version of the new Android tracker application in the US.
We're looking to further expand our mobile footprint in terms of both geographies and platforms.
We view our combination of mobile and web applications to be unbeatable when combined with our cutting-edge food and activity programs.
This value proposition has strengthened even more in our monthly pass commitment plan which brings all of these technology tools together with the tried and true meetings experience.
For the remaining three quarters of the year, we expect paid weeks growth of over 50% for Weight Watchers online.
As we enter the spring campaign, I am pleased to announce that we are now beginning to advertise behind our US Weight Watchers Online for Men product.
We plan to invest up to an additional $15 million to $20 million in television and online media this year to support the expansion of our brand into this important demographic group.
While men currently represent less than 10% of our meeting members and online subscriber base, they give us high marks on satisfaction with their experience with Weight Watchers.
With this investment, we are taking our first, serious step to begin to build awareness and relevance of the Weight Watchers brand to man.
To be clear, this is an investment in our future, as we do not expect to see our traditional media efficiency as we go after this new demographic group.
Further, much of the revenue benefit from the incremental men we do recruit will be seen in 2012 and beyond, while all the advertising expenditures will be borne in 2011.
As a result, we are forecasting an approximate EPS hit of about $0.10 associated with this new initiative.
This was not part of the original earnings guidance we provided at the beginning of the year, but is incorporated in our updated guidance for the year.
Now, I would like to turn the discussion over to Ann, who will elaborate further on our Q1 2011 performance.
- CFO
Thank you, David and good morning everyone.
The first-quarter 2011 was a high water mark for revenue and net income for Weight Watchers.
Our first quarter revenues reached $503.4 million, an increase versus prior of 29.8%.
Favorable foreign currency exchange added 1.4% to our revenues in the quarter.
Net income in the quarter grew by 65%, to $73.6 million, an increase of $29 million above the Q1 2010 level, and EPS in the quarter was $1, up $0.42 from $0.58 last year.
Looking at an overview and then at some of the details of our operational results, our operating income growth exceeded revenue growth in the quarter, with operating income of $135.7 million, increasing by 48.5%, or 47% in constant currency, over the prior-year quarter.
Our operating income margin, grew by 340 basis points in the quarter, to 27% versus 23.6% last year with the following as key drivers.
Volume growth in our businesses enabled gross margin accretion of 170 basis points.
Our marketing worked hard for us, driving significant volume growth at lower cost per acquisition in both the meeting business and the online business.
And we gained operating leverage at the G&A level, despite investing in business development areas.
Looking at our global volume trends and their impact on our financial results, as David noted, we came into the first quarter of 2011 with a significantly higher customer base than at the beginning of 2010.
Our monthly pass customer base was 16.5% higher, and our end-of-year, 2010 Weight Watchers online actives were up by 38.2%.
Recruitment in the first quarter was exceptionally strong as well.
As a result, global paid weeks increased by 39.7% in the first quarter versus prior, reaching $48.5 million.
Q1 2011 was the fifth consecutive quarter of global paid weeks growth.
Global attendance was up 20.3% versus prior, spurred by strong recruitment of both new and returning members.
The new program launches and other initiatives drove NACO attendances up 33.1% and UK attendances up 22% -- 22.2% for the quarter.
The online end-of-period active subscriber base, which had been growing steadily in 2010, had reached 1.8 million by the end of the first-quarter 2011, an increase in 86.6% over the Q1 2010 levels.
The impact of these strong volumes was to drive constant-currency revenue growth of 22.8% in the total meetings business, and 64.9% in the WeightWatchers.com business, and to increase gross margin to 56.2%, up 170 basis points.
In the discussion as follows, the growth percentages that I cite will be on a constant-currency basis.
Meeting fees and in-meeting product sales combined rose 22.8% in the first quarter to $370 million, driven primarily by the innovation launches and successful marketing campaigns in NACO and the UK.
Meeting fees were $260.9 million, 21.9% ahead of prior.
NACO's meeting fees were up 31.6% on paid weeks growth of 32.6%, while UK's meeting fees rose 28.6%, and paid weeks growing 21.9%.
These increases were partially offset by performance weakness in continental Europe.
In-meeting product sales benefited disproportionately from the new program launches because many existing members purchased program guides and starter kits, which are typically sold primarily to new enrollees.
Per attendance, in-meeting product sales rose 9.5% in NACO and a 8.6% in the UK.
In total, in-meeting product sales were $101 million globally in the first quarter, up 25.2% versus prior.
Revenues in the WeightWatchers.com business grew 64.9% in the first quarter to $92 million on the strength of 72.3% paid weeks growth.
Sign-up growth was particularly strong in North America and the UK, but we had growth across all major markets.
Our other revenues are comprised primarily of licensing and franchise royalty revenues, revenues from the sale of our products outside the meeting room, and revenues from our publication.
Our revenues -- our other revenues were $41.5 million in the first quarter, an increase of $7 million or 20.2%, 18.6% on a currency-neutral basis, versus the prior-year quarter.
Most of the increases in other revenues resulted from benefits of the program innovation.
Franchise commissions and sale of products to our franchisees were up a combined $2.7 million or 30.9% on the strength of the North America program innovation.
Our by mail product sales and revenues from our publications rose 28.4% or $3.5 million over the prior year quarter level, also spurred by the new program innovations around the world.
Licensing revenues were $16 million in the quarter, an increase of just 1.8%.
While licensing revenue did increase in the US and the UK, continental Europe's licensing business lost ground.
Our gross margin was 56.2% in the first quarter, 170 basis points above last year's level.
The increase was driven by gross margin accretion in the WeightWatchers.com business, where robust growth, such as we experienced in the first quarter, comes with minimal, variable costs as well as by differential growth in the high -- higher gross margin business.
In the meetings business, we experienced an increase in our average attendance per meeting of 22.3%, which drove meeting gross margin accretion despite some actions that we took in the quarter to ensure a successful launch of the new program.
Among these were at temporarily increasing staffing levels in our meeting rooms and call centers to enable us to better explain the new program to our existing as well as new members.
We also upgraded meeting collateral, and in addition, the quarter included nonrecurring expense as a result of the need to distribute new program materials to existing members rather than just to new enrollees because of the program changeover.
While net of these expense items, gross margin, excluding product sales, expanded the impact of our innovation products sell strategy further reduced meeting gross margin with a result that in total, it was effectively flat to prior year.
We temporarily discounted products to encourage the purchase of enrollment-related items by all members in the innovation market.
The temporary discounting strategies for effective, as reflected in the growth in in-meeting product sales per attendance in our innovation markets.
These actions were related to the innovation launch strategy.
For the rest of the year, we expect the meeting gross margin to expand in comparison to prior.
Marketing expenses for the first quarter of fiscal 2011 were $95.7 million, up 27.7%, or $20.6 million versus the first quarter of 2010.
We increased our off-line marketing spend by 20.8% across all of our key markets, with particular focus on innovation launch countries.
This proved to be a successful strategy in driving recruitment of both customers and new to Weight Watchers and returning members.
In the US meetings and online businesses for example, we increased marketing investment and support of our program innovations by up-weighting during the winter TV campaign and by adding TV continuity weeks.
Our Internet marketing spend increased by 58.6%, driving increase traffic to the website.
This resulted not only in significant growth in Weight Watchers online sign-up, but also contributed to growth in the meetings business and generated higher exposure to the brand generally.
Despite increasing our marketing globally, our cost per customer acquisition declined by 19% in the meetings business and by 31% in the online business.
Marketing expenses as a percentage of revenues were 19% in fiscal 2011 first quarter, as compared to 19.2% in the prior-year period.
Selling, general, and administrative expenses were $51.7 million for the first quarter of 2011, an increase of 11.5% versus the first quarter of 2010.
We incurred higher consulting fees associated with business development, higher technology related expenses including for the development of global applications, and higher salary expenses associated with business performance and growth, including higher bonus expense.
Selling, general, and administrative expenses as a percentage of revenues for the first quarter, declined to 10.3%, from 11.8% in the first quarter last year, providing 150 basis points of operating income margin accretion.
Moving on to interest expense, which was $18.2 million in the first quarter, interest expense was down marginally from the prior-year quarter by $0.5 million or 2.8%.
Our effective interest rate increased slightly to 5.03%, up from 4.95% in the first quarter fiscal 2010.
During the quarter, we reduced our debt by $114.1 million, bringing our debt balance to $1.25 billion and our trailing 12-month net debt to EBITDA to 2.48 times.
Our cash flow from operations in Q1 2011 was $201 million before interest payments.
After capital expenditures of $6.5 million, we had $194.5 million of free cash available to service our capital structure and return cash to our shareholders.
We paid our quarterly dividends of $13 million and repurchased $34.9 million of our stock.
Leaving us with 73.7 million shares outstanding at the end of the first quarter.
In addition, we made interest payments of $16.9 million and reduced our debt by $114.1 million.
Now, I will turn it back to David.
- President and CEO, Director
Thank you, Ann.
We're obviously very pleased by the results of our NACO, UK, and WeightWatchers.com businesses in the first quarter.
Of course, we recognize that some of the strength is a reflection of having a weak comparable from the previous year.
Nonetheless, what we are seeing in these businesses is very encouraging and energizing for the Weight Watchers organization.
Despite the success of Q1, our management teams continue to focus their attention on sustained growth for the rest of 2011, and more importantly, setting the table for strong growth in 2012 and beyond.
Growth in 2012 and beyond is going to come from a combination of one, product and service innovation; two, high impact in ever present marketing; three, retail transformation; four, opening the healthcare channel.
Here are some early updates on our progress on some of these key areas.
Products and service innovation.
We've seen the value of providing innovation and product news to our business on full display this year.
While we do not have any near-term plan changes of the magnitude of the PointsPlus launch, we see multiple opportunities to make meaningful innovations across all of our lines of business.
On the programs side, we are planning for a major upgrade to the CE Pro Points program and meaningful enhancements and version upgrades to the US and UK programs for January 2012.
Further, we are looking to accelerate the pace of technology innovation and functionality platforms and geographic reach.
Our new Android application is just one example.
Retail transformation.
With the successful launch of our pilot markets in Tampa and St.
Louis, we are now proceeding with the process of fully upgrading our entire NACO fixed-retail center network.
We expect to have addressed approximately 60% of our stores by the end of this year with much of the remainder being completed in 2012.
We believe that these better retail locations, combined with stronger center branding, will be an important growth driver for us in 2012 and '13.
We also believe that it will create new service offering innovation opportunities ranging from allowing weigh-ins during non-meeting times to simple things like replacing flip charts with flat-screen TVs, further increasing the appeal, modernity, and convenience of our meetings.
Opening the healthcare channel.
Weight Watchers has a big role to play in helping employers and other payers control the hundreds of billions of dollars of expenditures in lost productivity attributable to obesity and unhealthy lifestyles.
Over time, we believe we can continue to grow revenue from this channel from the tens of millions we have today to hundreds of millions.
Much of the team's efforts up for this year have been to create the right product offering as well as the right service and sales platforms necessary to position us for growth in this important new channel.
For example, we are actively working on a version of monthly pass specially customized for the corporate channel.
We've also continued to build ourselves capability with the addition of new national sales reps.
We are also hard at work to ensure that we have the right IT systems necessary to support the reporting needs of this channel.
In the interim, we continue to get excellent response from the major corporate prospects that we have contacted, and we have already secured several promising new accounts, despite taking a very conservative sales approach so far while we develop our offerings and systems foundation.
Guidance.
With the strong, financial results in Q1, we've taken the opportunity to make additional investments in the business to allow us to secure continued growth in 2012 and beyond.
Examples include the aforementioned marketing to men, the acceleration and technology development, and our center locations upgrades to allow us to more aggressively capture our growth opportunities.
Despite these investments, the strength of Q1 and improving expectations will result in full-year financial performance above what we had originally forecasted.
Accordingly, we are raising our guidance range from $3.75 to $4 for fully-diluted share for the full year versus the previously provided EPS guidance range of $3.50 to $3.85.
This time operator, we would like to take questions.
Operator
Thank you Mr.
Kirchhoff.
We will now take questions from the telephone lines.
(Operator Instructions).
There will be a brief pause while participants register.
Thank you for your patience.
The first question is from Greg Badishkanian from Citigroup.
Please go ahead.
- Analyst
Great, thank you.
Great results, guys.
And, just as a follow-on, David, you had talked about a lot of investments you're making this year for 2012.
Do you think you'll be able to get some growth in 2012 off the tough compares from 2011 with all the investments you're making this year?
- President and CEO, Director
Yes, we feel very good that -- if you think about the things that we were doing this year, for example, when we went through kind of that recipe our sequence of events to drive a really good Q1 outcome, we look at that as a good guide, if you will, to the way that we are going to continue approaching our business.
And I think what we believe is that the combination of innovation combined with really effective marketing and strong customer in a way that captures the uniqueness of the Weight Watchers approach is a process that we can continue repeating with each passing year.
And that by itself is going to be an important way for us to continue pushing the business forward in both meetings enrollments as well as online sign-ups.
I think beyond that, if you think about the work we are doing with the retail transformation, that is going to create additional growth opportunity going into 2012.
And then, as we get into 2012, and in particular as we start pushing into 2013, we really believe that this healthcare channel is going to open up an entirely new way of getting people engaged in the Weight Watchers process in a way that we believe is sort of a uniquely ownable and capturable by Weight Watchers.
- Analyst
And it seems like you are investing a lot this year, because you can't afford to do that, and you raised guidance some, but maybe not as much as I would have thought just given the upside for the quarter.
So, I'm assuming that you are really using this year to reinvest back in the business for 2012 and not that necessarily that the momentum has slowed down significantly over the last month or two, right?
- President and CEO, Director
Well, no.
To be clear, as you heard in the prepared remarks, Q1 truly did benefit from a fairly -- or from a relatively weak comp in Q1 of last year.
- Analyst
Right.
- President and CEO, Director
But nonetheless, the results were good.
And I think as you also heard, we have good expectations for the remainder of the year, particularly as we look at NACO and the dot com business.
But, as you also heard, for example, we sort of jumped at the opportunity to really begin out our presence with men, which we have never done before, knowing that just by itself was going to be a $0.10 hit on EPS.
Accelerating the rollout of our retail network, continuing to push even more aggressively on software products development and a lot of other areas we think is going to be critical for our growth.
So, we are actively looking to make those investments, but we feel very good about the way that we see the year shaping up and we feel better about what it looks like going into the years that follow.
- Analyst
Good.
Good.
I just wanted to clarify that.
That's very helpful.
And then also just on looking at maybe who you are taking share from, Nutrisystem also saw kind of a market share gain throughout the quarter and in April.
Is it just from people who are doing it on their own that were not successful?
Are you taking in from other commercial weight loss programs?
Where do you think those customers are coming from?
- President and CEO, Director
The thing you always have to go back to, the fact that you always have to go back to, is 8 out of 10 weight loss attempts are people just trying to do their own thing.
And so, I think if you look at us from a competitive context with other commercial weight loss programs, what we have going for us now, more than ever, is that the combination of having a strong meetings business and a strong Weight Watchers online business, and now that we're starting to push out Weight Watchers Online for Men, is giving us multiple opportunities to profitably invest in marketing.
And the net impact of this is that if you look at our share of voice now in terms of our presence in the advertising marketplace, and certainly our presence in the media, is -- we probably have the strongest share of voice right this minute that we've had in quite some time.
And we think that this gives us some very nice, additional advantage over some of our commercial competitors who we would also argue have less of a lifestyle-based approach than we do.
So, this really allows us to capture more opportunities in some of those, potentially the expense of our commercial competitors.
But, really, if I had to estimate where most of the volume is coming from, in terms of new people coming into the fold, I would suspect that a lot of it is coming from people who otherwise were doing their thing.
And it's that 80% that really represents the biggest growth opportunity, and that's where we see our growth opportunities going forward.
- Analyst
Great.
And just finally, the program makes a lot of sense.
It's a nice innovation from the last one.
And the feedback from your customers and their weight loss, are you seeing some nice improvements in terms of weight loss versus the old program?
- President and CEO, Director
Well, I think what you heard in the prepared remarks is that we are very satisfied with the weight loss results we are seeing.
The important thing for us when we developed this program -- which I would argue was even more than nice, but actually quite important -- is that it allowed us to really much more push into the future which is around balanced nutrition, real food, and directing people toward food that is more nutrient dense, less calorie dense, and more satisfying.
We think that this is where the future is in terms of addressing the obesity epidemic.
And we are absolutely in the center of that, and we are in a far better position to be a good partner in addressing the obesity epidemic with this program than we were with any previous program, and certainly better than any other weight loss program that is out there by far, certainly compared to fad diets.
The thing that we design a program from a weight-loss perspective is we weren't looking to increase the average weight loss per week.
That was never the objective.
I think it is important we continue to do what we have always done, which is direct our members and help them achieve sustained but appropriate levels of weight loss to-- ideally targeting 1 to 2 pounds week, not more than that.
The markers, frankly, that we are looking for more, some of the things that you heard me reference in my prepared remarks, which is directing people to more healthful choices.
And in that case, we are absolutely seeing over and over and over again, our members are saying that they, instead of reaching for the 100-calorie bag of cookies, they are reaching for an apple.
We really believe that these types of changes are going to be the ones that are most important in helping guide our members and everybody who comes to us to more sustaining and more nutritious choices so that they can once and for all forget the process of dieting and start focusing on the process of adopting a healthy lifestyle.
- Analyst
Great.
It up the good work, guys.
Take care.
- President and CEO, Director
Thank you.
Operator
Thank you.
The next question is from Chris Ferrara of Bank of America.
Please go ahead.
- Analyst
Hey, good morning, guys.
- President and CEO, Director
Hey, Chris.
- Analyst
So, David, I think you said something to the effect that recruitment was higher with never members than rejoins.
I was wondering if you can put a little color around that.
I suspect that's a percentage, right?
I imagine they're still more rejoins in the meetings than are never members, right?
But if you could talk about that.
And also, can you talk about -- I know it is early days, but what is your sense of the retention level of the never members?
Because presumably you're getting a whole new class of people in here, obviously, that have never been there.
Do they behave the same way that your existing members do?
- President and CEO, Director
Yes, in fact you interpreted my comments on the nevers and rejoins absolutely accurately.
When you look at the growth rate of members, the sheer number enrollments this year versus last year, and you look at that percentage growth rate, that was a little bit higher than the percentage growth rate on rejoins.
Rejoins, the fact to consider with the NACO business as that we have such a large install base of people who know us and come back to us to get re-energized on the program, that rejoins are still a relatively higher percentage of our total enrollment.
But, really we view never enrollments as a key catalysts driving future growth.
One of the things you get with never enrollments, by the way, is that if you could rebuild your base of never enrollments, those are people who often will come back for a recharge, if you will, in the following years.
So in other words, driving never enrollment growth is important for driving long-term rejoin enrollment growth, and so it is very much a mutually reinforcing model.
In terms of reaction to the program, interestingly, particularly with this new program, and as you heard me reference, any time you launch a program shift of this magnitude, it's going to be a big change.
For example the people that were with us at the end of November who changed over, literally, in the course of the weekend, were going from all points to new points, if you will.
Whereas people that were coming brand-new to us had never known the old points program.
And what we've seen is those people have really taken to the new program in a really nice way.
What we also tend to see is that retention characters for new people, for never members if you will, can often, sometimes be a little bit stronger.
And certainly you can have some people who come in, who may be less informed of what Weight Watchers is and everything else.
But again, if you look at net retention for monthly pass, the cohorts that we were enrolling during January, February, March of this year and you compare the retention patterns versus the cohorts that we're enrolling January, February, March of last year, it's very consistent, despite some of the temporary transition issues with rejoins.
- Analyst
That's helps.
And my guess would be that when never members come in, they are more inclined to join on monthly pass, right, because you not only get the enrollment fee waived right away, it just make sense financially.
And if that's the case, I guess I look at meeting -- if we are trying to quantify the impact of the promotion that ran this period, and you look at meeting fees per attendee that were flat in a period I would've thought maybe just maybe the monthly pass concentration would've gone up given the big influx of never members.
Can you just talk a little bit about that and where I may be thinking about it incorrectly?
- CFO
Sure.
Realize though, that if monthly pass goes up, you do get -- it's a discounted product, so you are going to get a negative -- I don't even want to use the negative, but you are going to a lower meeting fee per attendee than if all of the people who came in the door where pay-as-you-go people.
So, especially if you have -- which you do have in the early days of somebody signing up, they are attending all of the time, so you are going to get from attendee perspective, you're going to get a little pull-down on that.
- President and CEO, Director
And though, Chris, you're other point is, I'm not sure that there is a difference in monthly pass adoption rates between never enrollments and rejoin enrollment and I'm not -- I don't think that is actually the case.
I think it's fairly consistent.
- CFO
I would say it's probably-- I think you had, though, you probably had people moving-- people who are existing members also moving into monthly pass, and that's another piece of the puzzle.
- President and CEO, Director
Yes, for sure.
- Analyst
That helps again.
And then, finally over to the online business.
Can you put a little color around the differences that we see between paid weeks and revenues and then end-of-period, online subscribers?
Because it would seem that the online subs end-of-period could be a leading indicator, not a lagging indicator, and I'm just curious how you think about that and how you reconcile the difference in growth rates between the two?
- President and CEO, Director
Yes, you are exactly right.
The end-of-period paid weeks is going to be a leading indicator, because if you think about paid weeks for the entire period, it's going to be the average on some level, of what you start with than what you end with.
And so if what you end with is higher than you start with, it suggests that your base increased over the course of the quarter.
And that is, in fact, what we saw with Weight Watchers online.
In terms of reconciling paid weeks to revenues, one of the things -- one of the sources of revenue that is included within Internet revenues is advertising sales from our website.
We are up very nicely in the quarter, but not nearly to the same extent as paid weeks were, and so that resulted in a growth rate of overall revenue as being a little bit lower than the paid weeks growth rate.
- Analyst
And kind of following up on that to the extent that you had 86%, 87% online end-of-period subscribers, why would online paid weeks decelerate over the rest of the year?
It looks like we are walking into Q2 with a bigger population of people on line now?
- President and CEO, Director
And that is absolutely helping, starting with that higher base of subscribers.
I think there's a couple of things happening, for example if you look in Q2.
First off, there is the effect of Easter, so this means that we were dark, if you will, in terms of both advertising and promotion for a full two weeks.
Whereas, by the time we turned advertising back on for Weight Watchers online, and promotions back on, we were already three weeks into our spring campaign of last year.
So, that's the first factor.
The second factor is that, as you recall, if you go back to Q2 of last year, when we relaunched the advertising program for Weight Watchers online, during that time, really beginning in Q2 going in consistently through Q3 and Q4, we saw a huge shift in sign-up growth rates.
It took a little longer for it to show up in the paid weeks, because we were basically sign-ups are going to be the most leading indicator, and it takes a while to build your membership base back up.
But we're now at a point where we have online sign-ups that are comping a much higher growth rate, a very strong growth rate in Q2 versus what we had in Q1.
In Q1 we had sign-up growth, but not nearly to the same degree that we had throughout the rest of the year.
So, the fact that we are actually seeing growth rates continuing to push nicely above what had seen from the higher base of growth in Q2 last year, early days, we view as a very good, early indicator.
You get into this odd territory where 50% growth in paid weeks somehow feels like deceleration.
But I think in the scheme of things, it's still a pretty great growth rate.
- Analyst
I would agree.
Thanks for your time.
- CFO
Just to kind of follow up a little bit, we had online sign-up growth in the first quarter of last year of 6%.
And went to 40% in the second quarter, and then 30% and then 60%.
So, the comp really changes dramatically when you get to the second quarter of the year.
- Analyst
Great.
Thanks a lot.
Operator
Thank you.
The next question is from Kurt Frederick from Wedbush Securities.
Please go ahead.
- Analyst
Hey, good morning.
- CFO
Good morning, Kurt.
- President and CEO, Director
Good morning.
- Analyst
Could you discussion plans in regards to the recent acquisition you did of the other half of your JV in China?
- President and CEO, Director
Sure.
We continue to believe, and we see this over and over again, that obesity as a health issue is sadly becoming a health issue around the world.
It's almost shocking to see the fact that obesity is even becoming an issue in impoverished nations in places like Africa.
Certainly as we look to places like China and we see other emerging economies, we see obesity becoming a bigger and bigger issue.
And as we look at that, I think for the long-term, we think it's going to be very important for us to continue identifying ways of really being masters of our own destiny.
So, it is hard for me to imagine that anything that is going to be more core to our future over the next 5, 10, 20 years than emerging markets.
And that is -- that's going to be a somewhat different priority than for our excellent partners who help us get the JV started, DANONE, it's not one of their core businesses.
It is a service business, and is generally of the business that they're in.
So, they've made the decision to focus on their kind of key growth pillars.
We are focusing ours, and this basically puts us in full control over our destiny.
- Analyst
And moving on to Europe, I was wondering if the performance in France, that still being impacted by the other fad diet?
And then is that impacting -- is that diet impacting any of your other markets?
- President and CEO, Director
I think the Dukan diet is still a factor in France in a timeframe that is not inconsistent with the Atkins diet that we saw in the US back in 2003 and 2004.
We would expect, that over time, that particular fad will go through the same path that it did in the US and will eventually sort of recede, if you will.
But, for right this red-hot minute, he is still very much on the scene in that country.
I think, though, in that context, I think our French team has done an excellent job.
For example, they've been very successful in getting growth back into their online product.
They are continuing to push some great initiatives in terms of driving the business forward even in the face of a fad like his.
What we also have seen is that more and more, we see health authorities, including the French Government, British nutrition experts, and then certainly, as he has brought his but to US, there's been a pretty steady chorus of nutrition experts and scientists who have really asked the question, why do we need another unsustainable fad diet?
And we've already been to this process.
And what we're seeing more and more is that there is a tremendous need for programs that focus on balanced nutrition, not programs that ask you to wipe out entire food groups, which we just know from history and from research, it's just completely unsustainable.
So, I think the nature of the weight management world is that fad diets like this are a reality.
They do come; they always have this immediate temporal appeal; it does tend to go away.
I have full confidence that our French team is going to weather their way through this and come out the other end even stronger.
And we certainly feel that our position is strong in all the other countries where we operate.
- Analyst
Okay.
And then on the retail transformation, I think you said 60% by the end of the year.
Previously you had talked about a couple of markets where you saw a lift after that entire market was complete.
I was wondering if there is in the markets that are now done and then if you've seeing kind of the same phenomenon?
- President and CEO, Director
No, because were not taking that approach to building it out.
The reason we did the market test in Tampa and St.
Louis was two fold.
First off, we want to see what kind of lift we were going to get and get a sense of ROI, which is really hard to get a bead on until you do a full market conversion.
And then secondly, we also wanted to better understand the operational implications to converting over a almost unnatural number of centers in a given market to basically learn where all the kinks were in terms of executing that kind of a program.
Now that we've gotten all those learnings, now that we know that the economic return is there, the approach we are taking is not flipping entire markets over, but rather focusing on when leases are coming due in expiring.
Which means that across the rest of the country, the full market conversions really won't happen, by and large, until the end of 2012.
So it's not going to be apples to apples the way.
It's going to be more of a steady process as opposed to individual markets where we're breaking leases and things like that.
- Analyst
Congratulations on a good quarter.
Thanks, guys.
- President and CEO, Director
Thank you.
- CFO
Thank you.
Operator
Thank you.
The next question is from Ken Goldman of JPMorgan.
Please go ahead.
- Analyst
Thanks, good morning everyone.
Congratulations.
- CFO
Hi, Ken.
- President and CEO, Director
Thank you.
- Analyst
Ann, I had a couple of questions that are more of the financial variety.
Number one, would you ever issue secondary stock to pay down debt?
Number two, would you ever split your stock?
And number three, can you update us on the long-term commitment of the Artal folks to holding your stock?
It's been a great investment for them recently, and I'm sure they are in it for the long-term, but it is something that some investors are talking about a little bit more right now.
- CFO
Well, just to the questions that I can answer, I will just say that in terms of our debt, we generate plenty of cash from operating activities, so there's really no need for us to take any other extraordinary measures to pay down debt.
In fact, we are down to 2.5, 2.48 net debt to EBITDA, and by this year we'll be below 2 times.
So, I don't think there is any need to consider any other approach there.
In terms of our Artal's plans, I think you have to ask Artal.
I'm sorry, what was your third question?
- Analyst
Would you ever split the stock?
- CFO
That's not -- certainly not something we've talked about publicly at all.
So, I really can't comment on that either, sorry.
- Analyst
Okay.
And then a question for David, and this is a nit-picky question in an otherwise outstanding period.
But, I understand that meeting fees per paid week go down as interest in Weight Watchers rises, because you're discounting a bit get people in, as you mentioned, and that make sense.
But it's a metric that has been down for 2 or 3 years now.
So, is it possible there's something else to consider in our analysis there?
I'm guessing it's a result of some real unusual volatility in the economy and so forth, and as things normalize, your trends will improve.
- CFO
Just to clarify, for a second, meeting fees per paid week are not down.
Its meeting fees per attendance that you might see some decline in, because more people are taking up monthly pass.
But even there, sorry, we are really not seeing a decline.
In terms of -- I misspoke for a second.
Meeting fees per paid week are a function of the fact that more people are moving into monthly pass.
- Analyst
Right.
- CFO
A discounted product.
- Analyst
Okay.
- CFO
If you look at total revenue, you're getting a tremendous lift in total revenue from the fact that we have much longer retention on the monthly pass product.
So if you were to look at meeting fees per attendance, you would see the lift there a function of people buying monthly pass and not attending every single week that they are paying for.
- Analyst
Right.
- CFO
So it's basically a much --
- President and CEO, Director
I think what is interesting, Ken, is that we've heard a couple of our commercial competitors in commenting on our results in the beginning of the year have suggested that we'd been engaged in kind of heavy promotional activities.
Let me just say right now, that absolutely not the case.
- CFO
Not the case.
- President and CEO, Director
We are running exactly the same promotion in Q1 that we ran in Q1 of the year before, and frankly, Q1 for 10 years before that, which is basically free registration.
And so we have not been really using different promotional schemes for meetings with a couple of exceptions.
But again, as Ann gets back to, really some of the changing around has much more to do with monthly pass penetration.
- CFO
Also, the other piece is, as you see the WeightWatchers.com business growing, and you look at the total company paid weeks, and you see a shift because WeightWatchers.com product is less expensive than the meeting products.
You might be a little of a shift there just because he you get a bigger up-take on the dot com product as a percentage.
- Analyst
Okay.
So it's natural, then, as things progress for metrics such as that or things like attendance per paid week or the dollars per subscriber online, for those things to slip a little bit.
It's not something you would look at as a concern at all?
- President and CEO, Director
No.
And actually, the dollars per online subscriber are not slipping.
So, let me just make sure that we're using all the same language.
- CFO
Right.
- President and CEO, Director
We are getting the same retention for Weight Watchers online that we have always gotten, which give or take is 9 months.
If anything, we have been taking price up.
Just a little bit, but we've been taking price up with Weight Watchers online.
And so if you look at revenue recognized for a typical monthly pass subscriber who for their subscription cycle or revenue, for a typical online subscription cycle, we're not seeing tremendous differences in those, and nor do we expect to see going forward.
The only thing that you might see is that there has been this continuing shift that began in early 2006 and continues to this day of people moving away from pay-as-you-go toward monthly pass.
And then online as a percentage of total corporate revenue is obviously greater, but if you look at revenue recognition for online revenue versus online paid weeks, you're not seeing tremendous differences.
- CFO
Yes, and just as an example, online paid weeks were 35% of total paid weeks in the first quarter of last year.
They're 43% of total paid weeks in the first quarter of this year, so that's going to be --have an impact.
- Analyst
Okay, I'll follow up more off line.
Thank you.
- CFO
And we can have a conversation.
- Analyst
Great.
Operator
Thank you.
The next question is from Bob Craig from Stifel Nicolaus.
Please go ahead.
- Analyst
Good morning everybody.
Just a couple of questions regarding the efforts to attract the male population.
Is WeightWatchers.com the primary vehicle by which you intend to do that as opposed to the meetings?
Or is that not the case?
- President and CEO, Director
Right now it is.
It is.
We think the Weight Watchers online product is a very easy gateway product into the brand for men.
That being said, I've met more than a few men, in fact, quite a few men, who go to Weight Watchers meetings who swear by it and have had a terrific experience.
They often go with a spouse.
We think over time there is a chance to change that.
But I think the first step is getting men comfortable with the brand and comfortable with the approach.
And again, what we see is that -- and I've seen this personally over and over again.
When men do Weight Watchers, when they learn about the points program, they actually start using it, they really take to it.
And, they succeed on it, and it makes sense to them.
It is logical, they get it, and they, frankly, by the time they come out there and they don't understand how anybody could ever do anything else.
It's just that the historic brand association has been with women.
And so it is really a process of changing and getting past some of those perceptions.
And what we find is that the Weight Watchers Online for Men is an easy way for them to ease into it.
Over time, we see tremendous opportunities to grow our appeal for men, both with our online product at our meetings product.
- Analyst
I suppose it's are holding meetings in sports bars, but I don't think that's --
- President and CEO, Director
I just took a note on that.
(laughter)
- Analyst
Any early read or early results?
I have seen the advertisements.
Anything to report there?
- President and CEO, Director
Actually, happily as I turned on CNN earlier this morning, I saw one, too.
It is -- it's too early days, but I think as we get into the next call, we will be able to report back.
I have met a few men already who have said they've recently signed up, so I think that's a good indicator, but it's not particularly statistically valid.
- Analyst
Okay.
And Ann, a normal, seasonal split about $15 million or $20 million incremental advertising, or is that being front loaded here?
- CFO
Just -- well, it is pretty normal seasonal split, yes.
- Analyst
Okay.
And Dave, you didn't quantify, but I take it continental Europe for the year is still expected to be down.
I think your prior guidance was high single-digit, low double digit.
Is that still a pretty good read?
- President and CEO, Director
Yes, I think so.
- Analyst
Okay.
And, the expenses associated with the real estate effort this year and next, care to quantify those?
- CFO
Yes, as we said a couple of times, it is more of the cash pulling forward cash to accomplish -- in CapEx to accomplish more of the renovations and retail transformation.
In terms of what you'll see from the P&L perspective, because of the way we've reorganized ourselves, because of the fact that we're moving centers and we're probably going to have fewer centers, you shouldn't see any impact on the actual rent expense as a percentage.
So, no margin impact.
- Analyst
Okay.
Is there any way that you could size up the corporate effort as it now stands and the growth rate of that effort?
- President and CEO, Director
The way to think about our health care revenue is that we start with an existing book of business, which is our at-work meetings.
And as you know, that's historically been about 12% of our North American attendances.
And that was, as you probably recall, the at-work meetings were sold kind of ground level tele-sales, 25 people at a company get together, and give us a call, and say can we get a meeting at -- a Weight Watchers leader to come into the office and give a meeting on site.
What we call our national accounts, of which we have a couple of great examples now, they're actually pretty sizable accounts, it's still such an [ace in] business, and it's such a relatively smaller portion that any of the growth rates that we would be experiencing now would look astronomical, but it's off of a tiny base.
I think as we get more and more into -- and the way I would think about the corporate business is that particularly that kind of selling at the corporate level and bringing in large major accounts is that 2011 is really about building foundation.
So, that getting a product right, getting the sales in operational aspects of that channel right, and in making sure that we have the right reporting systems.
And so it's a lot of foundation building this year with an eye toward allowing us to then kind of open the spigot, if you will, in terms of bringing in accounts as we go into 2012 and 2013.
- Analyst
Yes, that's helpful.
Are you contemplating any price adjustments, price increases?
- President and CEO, Director
It's a great question, because if you look at monthly pass, we're at $39.95, which is where we were in 2006 when we first launched at the end of 2006, and we haven't done anything with that since, particularly in your largest markets, the US.
Certainly, during the recession, we didn't feel that it was prudent to take any actions like that.
And I have to say, if there's -- I didn't address it in my prepared remarks, but we are like everybody who's in a consumer faith and business.
We continue to be a little bit concerned about what was happening out there with gas prices and with fruit prices and a lot of other non-discretionary inflation items going up.
We're mindful of that, but over the long term and potentially medium term, we certainly see a lot of head room for growth in terms of recognizing more value and potentially taking pricing.
But we want to do it in a way that is in sync with where the consumer is.
- Analyst
And last one.
I know this is probably unanswerable, but you guys been in this business a long time.
Any thoughts on the staying power of a marketing campaign and/or the popularity of a spokesperson?
- President and CEO, Director
When I look the approach that we took, which is a combination of combining innovation with strong marketing and powerful marketing.
If I look, for example, on the innovation side, I see no shortage of opportunities of continuing to innovate and improve the things that we offer.
And that can be in the program.
It can be in technology.
It can be in different service configurations.
And so I think product news is something we could always have.
I think if you look on the marketing strategy, really the shift that happened last year was us going back to our core historic roots of driving authenticity through the voice of our members.
And we believe that in a way that really only Weight Watchers could do this is that way.
And so we believe that is a recipe and approach that worked very well for us that we can continue to repeat and provide year after year of year.
And we can continue to find new, compelling ways of delivering that authentic voice.
Sometimes that's going to be in the form of a celebrity.
Sometimes that's going to be in other ways.
I think in terms of staying power, frankly, if -- we don't have some of the examples, but Sarah Ferguson, the Duchess of York, was a tremendous example for us and a tremendous help to our business for many years.
And, we continue to see lots of different ways that, for example, we can work with Jennifer to find new ways of inspiring the population that they can make this amazing change in their life.
I had the pleasure, she actually came through the officer yesterday and made an appearance at our own internal at-work meeting.
Suffice it to say, it was the most populated at-work meeting that I've seen in our office in quite some time.
In listening to her talk about it, she talked about her experience in tracking points, and she just did such a beautiful job of conveying it, and the reason is because she really does it.
And I think that the realness of her approach is the thing that connects people because, she is a Weight Watchers person now.
She thinks about points, she counts, she thinks about different food choices, and I think, that kind of authenticity does inherently have good staying power.
- Analyst
I appreciate all the color.
Thanks, David.
Operator
Thank you.
(Operator Instructions) And the next question is from Chris Ferrara from Bank of America.
Please go ahead.
- Analyst
Thanks for the follow up, guys.
So, David, sounds like you talked a lot about by region and with the dot com about -- sounded like revenue expectations for Q2 through Q4 are higher.
Can you talk a little bit about what your overall expectations are for revenue for Q2 through Q4?
Even just directionally if you don't want to go to numbers.
It sounds like you expect those numbers to be higher.
Is that right?
- President and CEO, Director
Are you talking about Weight Watchers online?
- Analyst
I'm talking about the entire biz.
Sounds liked NACO rest of the year looks better.
CE, UK looks better, and online, but just overall for the whole Company, does it all look better, Q2 through Q4?
- President and CEO, Director
I think by definition with the guidance being higher, obviously, some of that's happening on the top line.
I think what's fueling -- if you think about it, when you have a great Q1 as we did, that certainly gave us $0.10 versus maybe what expectation was for Q1.
But really that recruitment drive delivers value throughout the course of the year in terms of top-line and then bottom=line growth.
And so I think we -- from Q1 recruitment trends alone, that by itself is going to drive top line.
Ann, I don't know if you want to add --
- CFO
Yes.
I was just going to say, the guidance that we gave last time was 15% to 20% on the full year revenue growth.
I think now you can think about it at the high end of that range.
- Analyst
That's helps.
And also on SG&A, and given the incremental investment you guys have talked about, SG&A I think you said for the full year was going to be down as a percentage of sales, but not all this much, slightly.
And I think you said ads would be or market would be flat year on year.
Given that you were thinking revenues are going to be higher, right, but spending is going to be higher, do those two data points hold for here?
- President and CEO, Director
Yes.
I think if you look at marketing.
I'll give you a good examples.
We've been able to be opportunistic.
So, for example, we found out that Jennifer was going to be featured on the Grammys, and she was going to be part of the opening act doing the Aretha Franklin "Respect" song and was going to be getting good visibility, so we jumped at the opportunity, therefore, to invest some advertising at the Grammys.
And so as we see these types of opportunities, we take them, and we're continuing to be very aggressive at pursuing them with the understanding and belief that there going to be concurrently driving enrollments.
And so as we see opportunities like that, we'll take them, and so for that reason, it is reasonable to expect marketing to stay fairly consistent as a percent of revenue over the course of the year.
In some cases, I can't even rule out the possibility if saw a great opportunity in the fall, we might jump at that to bring in some additional volume into the business, even knowing that the revenue that we get from someone we bring in fall is mostly going to be in the following year where would be recognizing all the expense associated with fall.
But as we get into those types of decisions, we will certainly share that with you guys on calls, similar to what we shared with Men because, that really have the same kind of effect.
In terms of G&A, as we referenced on previous calls, and your little bit of today, the places where we are really investing in the business, again, it really comes down to technology.
There's not a single growth opportunity that we have that doesn't have a meaningful technology component to it, either in terms of application development or supporting systems.
And so we're looking for opportunities to increase the technology investment.
Certainly the retail rollout has some impact, not as much on an EPS perspective, because as Ann has pointed out, the overall rent footprint, if you will, is fairly consistent because we're getting better terms as well as having a more optimized meeting network.
But we are increasing CapEx associated with those centers.
The health care opportunity were going to have to invest in front of in terms of bringing in a new team of people that can allow us to build that opportunity out, and so some of the incremental G&A is going to come in the form of bodies that are going to be hugely productive for us going forward into '12 and '13.
And so those are the types of places where we're making those investments, but I think still the previous guidance we've been providing is --
- CFO
Right, and always mindful of not growing the core base of G&A but always looking in terms of how to -- if we're going to increase G&A towards growth in the future.
- Analyst
Great.
Thanks again.
- President and CEO, Director
Yes.
Operator
Thank you.
This will conclude the question-and-answer session.
I'd like to turn the meeting back over to Mr.
Kirchhoff.
- President and CEO, Director
Thank you for joining us today, and I look forward to speaking with you again at our next quarterly earnings release.
Operator
Thank you the conference has now ended.
Please disconnect your lines at this time and thank you for your participation.