WW International Inc (WW) 2014 Q2 法說會逐字稿

Good day and welcome to the Weight Watchers second-quarter conference call.

(Operator Instructions)

Please note this event is being recorded.

I would now like to turn the conference call over to Ms. Corey Kinger.

Ms. Kinger, the floor is yours, ma'am.

Thank you, Mike and thank you to everyone for joining us today for Weight Watchers International second-quarter 2014 conference call.

With us on the call are Jim Chambers, our President and Chief Executive Officer; and Nick Hotchkin, our Chief Financial Officer.

At about 4:00 PM Eastern time today the Company issued a press release reporting the Fiscal 2014 second-quarter results.

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 measures are also available as part of the press release.

Before we begin, let me remind everyone that this call will contain forward-looking payments.

Investors should be aware 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 more a 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 Jim Chambers, President and Chief Executive Officer of Weight Watchers International.

Jim?

Thanks, Corey.

Good afternoon, everyone, and thank you for joining us.

On today's call, I'd like to update you on our business performance, as well as the progress we're making on our transformation initiatives.

Nick will then take you through the details of the Q2 financial results, give a progress update on our cost management actions and review our outlook for the balance of 2014, as well as an early read into 2015.

My remarks will follow the four strategic pillars of our transformation plan, which by way of reminder are, one, driving immediate performance improvement; two, reimagining our core offerings; three, growing our healthcare business; and four, strengthening our organization.

In the second quarter, we delivered total revenue of $398 million.

And excluding special items, adjusted operating margins of 30% and adjusted net income of $56 million or $0.98 per share.

The biggest challenge we face in our business continues to be recruitment, as competitive forces continue to impact our current consumer offerings, with mobile apps and activity monitors garnering a large amount of consumer and media attention and negatively impacting our consumer trial.

Recruitment is down in the majority of countries in which we operate in both meetings and online.

Importantly, however, once consumers engage with Weight Watchers, they continue to value our service as shown by our retention trends.

Average length of stay in Q2 remained at eight months for monthly pass members and nine months for Weight Watchers online subscribers.

Our recruitment trends in Q2, while still negative, are not deteriorating further.

Combined with the cost management actions we have taken, ranging from taking cost out of vendor relationships through improved procurement capabilities, to reducing the size of our organization, we are managing through a tough environment in making a positive impact on our immediate results.

We had planned reductions in our marketing spend year over year, as we took a prudent flexible approach, focusing our resources on activities with the best return and also experimenting with various promotional tactics.

Coming out of a slow start in Q1, where our original advertising creative did not broadly resonate, we pulled back on our levels of investment even further.

At the same time, as you will recall, we pivoted and quickly introduced revised advertising creative, which helped improve our performance.

Net, our marketing investment in Q2 was significantly lower than last year.

Leveraging consumer insights on Simple Start, we tapped further into the value proposition that Weight Watchers allows people to have a strong and flexible relationship with food, which is critical to consumer acceptance.

Our UK team quickly took these learnings and developed food-focused ads that featured Simple Start.

After launching in the UK, the ads were then adapted and rolled out to North America and other markets in Q2 as our TV spring campaign.

Over the last year, as we built out our new leadership team, one of our first goals was the breaking down of artificial barriers within the Company, between meetings and online, across functions and between geographies.

Fast forwarding to today, it's great to see the collaboration and sharing of ideas starting to benefit the business.

I'm pleased by how our teams have worked together.

For example, in experimenting with different promotional and marketing ideas, such as extending food-centered consumer activation through new local marketing initiatives, and testing time-bound promotional channels to reach a wider audience of never members.

Turning to our second strategic pillar, the reimagining of our offering, we are excited about our plans for winter diet season 2015 and the accompanying repositioning of our brand.

As discussed previously, we believe our innovation for the upcoming winter season will be a meaningful step in the right direction.

It is our fundamental belief that tools alone, technology alone, food programming alone, will never reach the levels of success that are possible when they are combined with human engagement to guide and provide inspiration and accountability.

The strength of the Weight Watchers brand is and always will be in the human connections that make a weight loss journey more successful, connections between members and between members and service providers.

These human connections have always been present in our meetings offering but not in our online offering.

Our innovations for winter season 2015 will bring this power to our online offering for the first time, and strengthen its impact in the existing meetings offering.

This expansion of personalization and community elements in our offerings will leverage our talented service providers.

Our 2015 offerings will be expanded to provide one-on-one, personal advice from Weight Watchers experts to our online numbers for the first time, while also providing greater personalization and connection in between meetings for our meetings' members.

While we will not be providing more specifics on our innovations until they are rolled out because of commercial sensitivity, we are actively engaged with consumers to refine our approach and plan for implementation.

Early consumer feedback is encouraging and we are excited at the prospect of thousands of Weight Watchers experts expanding their ability to reach consumers with the personalized support, skills and community needed for a successful weight loss journey.

In addition to these enhancements, a key part of our strategy to reimagine our offerings is the opening up of the Weight Watchers brand, changing the way we show up across all dimensions of the consumer experience.

We have a great opportunity to make Weight Watchers a more inviting and inclusive brand, and as a result, to reach a wider set of consumers.

Our strategic work to strengthen and reposition our brand is under way, and will be launched to accompany our winter diet season 2015 innovations.

I expect to provide more color on this critical initiative on our next quarterly call.

We continue to work on our innovation pipeline extending well beyond winter season 2015, as we pursue a model of more continuous innovation and less reliance on winter season alone.

The evolution of our core program, better reaching under-penetrated demographics and reaching consumers at more moments in their journey to a healthier lifestyle, will all be important considerations as we make fundamental changes to how we define and present Weight Watchers in the future.

You will recall that in Q2 we acquired Wello, a small San Francisco-based technology startup that offers one-on-one and group fitness training online through interactive video.

By way of update, the team from Wello is now onboard and they are providing great insights on a near-term innovation agenda, as well as contributing to the thinking on how best to leverage the adjacencies of weight management and fitness in the future.

In the near term, prior to the 2015 winter season, we are on track to deliver improvements to our digital experience, including strengthening search and simplifying tracking.

In addition, we will leverage API technology to allow our members to integrate wearables, in-home devices, apps and ecosystems into their Weight Watchers experience.

In combination with our comprehensive program, these tools can be helpful to our members.

We recently launched our first activity monitor integration partnership with Fitbit in Germany, which allows our members to use Fitbit devices to track activity and translate it to Weight Watchers points values.

This partnership goes beyond simple technology integration.

Fitbit has designated Weight Watchers as a privileged partner and is marketing Weight Watchers to its user base in Germany while we sell their devices in our meeting rooms.

Our third strategic pillar is growing our healthcare business.

We continue to make progress on enhancing our technology capabilities and processes for healthcare, including data management, privacy protection, eligibility verification, billing and reporting.

As discussed previously, these improvements require significant investment, which is well under way and will accelerate through the remainder of the year.

Further, progress against our goal to engage in at least one commercial partnership in 2015 is encouraging.

We continue to expect that our healthcare initiative could make meaningful revenue contributions beginning in 2016.

We believe the healthcare space will increasingly demonstrate market demand for proven, effective, and cost-efficient weight management programs.

This view was validated again in May when the UK's National Institute of Health and Care Excellence said their research found that the cost of losing weight in a safe and sustainable way, via a program such as Weight Watchers, could result in significant savings over the long-term.

As a result, we are accelerating our efforts to enter into partnerships with UK healthcare authorities, making Weight Watchers a more compelling choice for physician recommendations.

Finally, pillar four, strengthening our organization, which is key to turning around and transforming this business.

In the past year, we built out a strong senior team, restructured the organization with simplified workflows and increased accountability, and enhanced our innovation capabilities.

In addition, our technology transformation is progressing well against our goal of changing our technology base from a legacy challenge into an enabling asset.

We are selectively adding to our talent pool in key strategic areas.

For example, we recently hired Dondeena Bradley as VP of Global Innovation to drive the innovation pipeline for both our meetings and online offerings.

Dondeena is an experienced global leader with a deep skill set in nutrition, health and innovation.

She joins us from PepsiCo where she was most recently Vice President of Nutrition Ventures.

Now, I will turn it over to Nick for more detail on our financial performance and a look ahead.

Thanks, Jim, and good afternoon, everyone.

During Q2, we saw a continuation of our negative top-line performance.

Total Company revenue in the second quarter declined 15.6% to $398 million.

Continental Europe continues to be our strongest top-line performing segment, particularly France.

Second-quarter global trade weeks were down 14.4% driven by declines in online and meetings.

End of period global length of subscribers declined 12.7% to 3.4 million, with monthly pass active subscribers down 10.7% to 1.4 million, and active online subscribers down 14.1% to 2 million.

Despite continued expense discipline, our lower revenue puts substantial pressure on the P&L, resulting in an operating income decline of 25.6% in the second quarter.

EPS was $0.95 on a reported basis and $0.98 on an adjusted basis in the second quarter.

Adjusted EPS excludes $0.07 in restructuring charges and a partially offsetting $0.04 net tax benefit associated with the closure of our China business and the recognition of a valuation allowance, related to tax benefits for foreign losses.

In the prior-year second quarter, adjusted EPS was $1.39, which excluded a $0.24 charge related to our 2013 debt refinancing.

For reference, in the quarter foreign currency benefited our results by approximately $0.02 per share.

During the quarter, we continued to deliver incremental improvements across many areas of our business.

As a result, Q2 EPS came in ahead of our internal expectations.

Turning now to our results by geographic segment, which I will discuss on a constant-currency basis.

Our North America business remained under pressure.

And in the second quarter, total North America revenues declined 21.3%, with meeting fees down 19.3% and online revenue down 22.2%.

Meetings paid weeks declined 16.9% and online paid weeks declined 21.1%.

In-meeting product sales declined 32.2% with product sales per attendee down 16%, primarily driven by lower sales of enrollment products.

During the quarter we maintained a focus on cost, which partially helped to mitigate the impact of volume declines.

In the field we have made good progress in reducing under-performing drop-in hours and consolidating small meetings.

On the corporate side, we have introduced new procurement capabilities and processes, resulting in contract renewals savings with vendors.

In the UK business, second-quarter total revenue was down 16.1%, with meeting fees down 11.4%, and online revenues down 13%.

Meeting paid weeks declined 10.1% and online paid weeks declined 11.6%.

In-meeting product sales declined 19% with product sales per attendee down 6.4%.

Not long ago, the UK was our most challenged market.

The team is made progress over the last six months as reflected in the improving results.

In Continental Europe, total revenues declined 2.4%, with online revenue up by 5.5% and meeting fees down 4.4%.

Online paid weeks increased 3.7%, benefiting from a higher active subscriber base at the beginning of the quarter as compared to the beginning of Q2 2013, partially offset by staff recruitment.

Meeting paid weeks declined 3.3%.

In-meeting product sales were down 5% and product sales per attendee were up 0.8%.

Effective promotional activities helped drive these results.

Our analysis shows that our perfect coronership, which is focused on delivering a better member experience in the first weeks of a weight loss journey, is improving meeting attendance.

Now, to review some key financial metrics of Q2, 2014.

We incurred pretax restructuring charges of $6.5 million, or $0.07 per share in connection with our previously disclosed plan to resize the organization and restructure our field operations, bringing total year-to-date spend to $10.2 million.

On the technology front, we're moving faster than we had expected on restructuring our tax organization and cutting legacy spending.

We are now anticipating approximately $12 million in overall restructuring expenses this year, split fairly evenly between OpEx and G&A.

Our philosophy continues to be to invest in key areas in support of future growth, but to cut aggressively elsewhere.

We are on track to meet our gross annual run rate savings target of $150 million, as compared to the end of 2012, by the end of this year.

Based on the actions we have already taken, we expect to reduce OpEx and G&A by an incremental [$60] million in 2014, and achieve our two-year goal.

It's important to note, however, that only a portion of these savings are dropping to the bottom line in 2014, given that we are reinvesting in the business.

Now, to the P&L details, excluding the impact of our restructuring expenses.

In the second quarter, gross margin declined 270 basis points from the prior year to 57.6%, primarily due to operating cost deleverage, as well as the impact of our 2013 US service provider compensation changes.

Q2 marketing spend decreased $24.5 million versus prior to $46.2 million, reflecting the nimble management of our marketing activity that Jim discussed.

We had lower total TV advertising activity as well as lower production costs, combined with a continued focus on digital marketing efficiencies.

Q2 G&A expenses increased 4.6% versus prior to $61.7 million.

Our top savings initiatives being more than offset by ramping spend in connection with our program development, and healthcare initiatives, as well as timing differences in certain accruals.

Our Q2 tax rate was 34.4%, due to the one-time net tax benefit that I've already discussed.

Excluding the tax benefit, our tax rate would have been 37.4%.

Looking at our balance sheet and cash generation, we ended the quarter with $276 million in cash, And cash flow from operations totaled $65 million in the quarter.

Based on this performance, we expect full-year cash flow from operations to comfortably exceed $200 million.

Our $2.4 billion outstanding term loan did not have any restrictive leverage-related financial covenants, and our next meaningful debt maturity is the $300 million due in 2016.

While our revolving line of credit availability will be reduced from $250 million to $50 million when we exceed five times leverage, it remains undrawn and we have no current plans to utilize this bank facility.

Our debt to EBITDA leverage ratio increased to 4.9 times as of June 30.

Now, I will discuss our outlook for 2014.

While the year-over-year recruitment trends are negative, they are slightly better than we anticipated at the beginning of the year.

Therefore, for the full year, we now expect total revenue to be north of $1.45 billion.

For Q3 and the full year, we anticipate year-over-year revenue in paid weeks to be down in the low to mid teens.

In North America, we anticipate that Q3 and full-year revenues could decline by up to 20% and total paid weeks will decline in the high teens, with meetings paid weeks performing slightly better than online paid weeks.

In the UK, for Q3 and the year, we expect revenue and total paid weeks to decline by approximately 10%,with online and meetings paid weeks performing similarly.

For CE, we expect revenues for Q3 in the year to be slightly positive.

Total paid weeks are expected to be up slightly for Q3 and the full year, with online paid weeks growing and meetings paid weeks declining.

Now, some detail on the cost lines.

With gross margin, we continue to expect our full-year gross margin to decline by up to 400 basis points, with Q4 declining more than Q3.

This decline is worse than in the first half of the year, due to the timing of incremental investments in the winter season and our outcast initiative, as well as accelerated depreciation of some of our legacy technology assets, as we dig in to replace them with new capabilities, all of which are progressively impacting the back half of the year.

We now anticipate that full-year marketing expense will decline by approximately $30 million.

For Q3, we expect marketing expense to be roughly flat year over year as we invest to support the fall season and anniversary the particularly deep cuts we made in marketing in Q3, 2013.

Also, please note that Q4 will include a 53rd week, which comes at a marketing-heavy time for our business.

Therefore Q4 marketing spend will likely be higher year over year.

For the full year, we continue to expect G&A to be down low single-digits versus prior as we move through the year.

G&A is impacted as we ramp up our investments and our strategic missions, including healthcare and technology.

Below the line for the year, we expect interest expense to be approximately $122 million, with increase versus Q1 due to the interest-rate swap that went into effect on March 31, 2014.

For the full-year, our tax rate will be approximately 36.8%, as a result of the unusually low rate in Q2.

Excluding the tax benefit impact, our tax rate would be approximately 38.3% for the year.

For 2014, we expect CapEx of about $50 million and D&A of $45 million.

So far in 2014, we have been acting with urgency and responding well to drive all the recruitments we can, while carefully managing expenses.

As a result of the slightly better revenue outlook, and the work we continue to do on top, we are raising our 2014 EPS guidance to a range of $1.65 to $1.85.

This guidance excludes the $0.11 one-time gain from Q1, the positive $0.04 net tax adjustment in Q2 and the full-year $0.13 of severance cost related to our restructuring.

While this revised guidance is above the virtual expectations we outlined for the year, it remains well below the $3.87 in EPS we delivered in 2013.

Before I turn it back over to Jim, I'd like to take a minute to talk about 2015.

While we have barely begun our budgeting process, we would like to provide you with an early view into our thinking in order to assist you with your modeling.

We are confident that the enhanced offerings and repositioning of the brand will make 2015 the inflection point for our business.

And that the associated recruitment growth will more than offset the incremental variable cost associated with the new offering.

To drive this growth, we expect to keep marketing investment at similar levels to 2014.

Note that our 2015 P&L will be pressured, particularly in the first half, as we will still be carrying the legacy technology platform that we expect to wind down by the middle of the year.

We will also continue to invest in the healthcare initiative in advance of the revenue benefits being fully realized.

In addition, when we compare [2015 EPS to 2014], given the significantly negative recruitment trends this year, we will begin 2015 with a lower starting access space, which will drive a negative EPS impact at about $0.60 per share.

As usual, we plan to provide 2015 guidance in February by reiterating that these remarks represent an early view to assist you in your modeling.

Thanks, everyone, I will now hand the call back to Jim.

Thanks, Nick.

Looking back on my first year as CEO, we started with a forthright situation assessment and translated that into an operating plan with the short-term urgency of a turnaround and the strategic vision needed for longer-term transformation.

We are executing on our multi-year agenda and I'm encouraged by the early progress.

We are aggressively controlling costs.

Developing a solid game plan for winter season 2015 and revitalizing the Weight Watchers brand.

Building the foundation for a robust healthcare offering, turning around our technology organization and capabilities and building a willing town base from executive leadership to all levels in the Company.

There is still a good deal to be done and we are committed to tackling the items before us as we build for the future.

Thanks again for joining the call today and we will now open it up for questions.

(Operator Instructions)

Jerry Herman, Stifel.

Nick, I just wanted to ask you question about the very last comment you made, in fact, with regard to the $0.60 impact.

We certainly appreciate that color.

I'm wondering if you can give some additional detail around that, in terms of some of the basic assumptions, or even logic, that you utilized to generate that number?

Sure, Jerry.

The impact is essentially driven by the fact that we've had solidly negative recruitments this year.

So, both on our monthly pass actives and our online active subscribers, we start 2015 with both sides of the house being down mid teens versus the 2014 starting point.

That drives a headwind that we've mentioned.

Okay, great.

Just to add, Jerry, if I could.

The headwind associated with those actives, and as we reiterated, there are additional costs, variable costs to our offering that we are confident that can be more than offset by the revenue that we'll generate.

In 2015, like 2014, you'll see us continue to invest in the business to finalize our tech reinvention and to complete our healthcare capability build-out.

Great.

Guys, I'm wondering if you could talk a bit about the current subscriber base.

In particular, the composition of that subscriber base.

What I'm getting to is, is there any read on the percentage of those subscribers or users that are legacy users, if you will, as opposed to new users?

What I'm really getting at is, are you getting close to some recurring user base of loyal Weight Watchers customers?

I think, Jerry, when you looked at our businesses on average, folks in our meeting business, about two-thirds of those folks have been with us before.

On the online business, about one-third of the folks are new to the brand.

I think what we're confident in, is that what we'll be introducing in 2015 will appeal both to new people to the brand and to lapsed members.

I'll turn it over.

R.J. Hottovy, Morningstar.

I wanted to start on the healthcare business.

And, Nick, your comment about, or as Jim's comment about, 2016 being the first year positive revenue contribution.

I wanted to see if the longer-term goals that you established at last year's Analyst Day, I believe it was $300 million in incremental opportunity, was still valid.

An then an update on how many strategic accounts you have in that business.

Any color you have in that segment might be helpful.

Let me start and talk to the Analyst Day part of it and then Nick can pick up from there.

You're correct in recalling that on the day we expressed our basis for strategic interest in healthcare.

As part of an illustrative view of how the Company might look when we return to growth in the future, we did describe the healthcare opportunity in numbers like you are suggesting.

We still feel that opportunity is there for us.

I think we've been clear about the investment required to get there.

That investment also plays very heavily against the existing account base and our strategic customers, as well.

Those improvements in reporting and individual data tracking, those are very strong requirements in this channel.

So, we still feel that that target is reasonable.

We still feel committed to the healthcare strategy.

I'll turn it over to Nick for the last half of your question.

R.J., strategic business, it's a relatively small business for us right now, about $25 million in revenue, but with good potential.

We had some good progress in Q2, able to sign six new strategic deals, including Geico, Lincoln Financial Group and Heimat Health.

We are confident that going to healthcare business can be a good part of our future.

Thanks.

I had a second set of questions on the technology platform, in general.

One is, do you have plans to incorporate the app integration efforts that you have with Fitbit or some of the other partners out there as part of your 2015 marketing plan?

The second question I had is, what has generally been the meeting group leader response to some of the personalization efforts that you guys are talking about?

Any color behind that, that would be also very helpful.

Thanks.

With respect to the technology platform integration, as I mentioned, in the short run before 2014 is out, we will be leveraging API technology integration to provide access to a number of devices and in-home appliances to richen the experience for Weight Watchers members.

So, that's a very distinct part of our strategy.

We think it plays to the strength of our community.

It extends their reach, it creates new partners.

And it begins to leverage the potency of fitness and weight management together, which is something we have always talked to.

And as evidenced by the very early work in Germany, we can see that it really resonates with our members, to be able to address activity in a very much more specific and deeper way, along with weight management.

We see this as a particularly strong strategy for opening up Weight Watchers and leveraging the size and strength of our community to create an even stronger experience.

With respect to the second question, our leaders and receptionists, they live for and they love helping members become more successful in their weight management journey.

Any and all ways that we can extend their ability to do that, are things that they find very positive.

Early in our testing and in our dialogue with leaders around this direction, they have been very enthusiastic and very responsive.

Thanks.

(Operator Instructions)

John Faucher, JPMorgan.

In looking at the $0.60 number that you discussed, you also talked about an infection point in the business.

Is the $0.60 number a net number, or does that include the benefit of this inflection that you are looking for?

Is there any earnings benefit from that?

A more technical question, in terms of looking at the Q4 gross margin.

Is it the extra week -- I missed this.

Is it the extra week that's driving the Q4 gross margin performance to be worse than Q3, or is there something else going on there?

Thanks.

John, let me start on the gross margin.

Q4, the first half of the year was impacted by the operating deleverage due to our lower volumes and the investment in our service provider compensation.

As you get into Q4, you've not only got the ramping costs related to our healthcare initiative, but our guidance also assumes launch costs and training costs related to our winter season offering.

That's why Q4 is progressively worse than Q3.

In terms of the $0.60 impact, that's purely the math on our expected starting point of how many people we expect to have in our programs at the start of the year.

It doesn't include any view on recruitment.

As you've heard us say, we're confident that it can be an inflection point, that we will drive people to the brand next year.

Okay.

I apologize, one more clarification.

I think you talked about marketing spending being flat in 2015.

I assume that's on a dollar basis, then?

Yes.

That's our working assumption for now.

Okay.

Thank you very much.

Glen Santangelo, Credit Suisse.

Nick, I just wanted to follow-up on the guidance you gave on 2015, as well.

You also suggested you're still going to have some costs from your legacy IT platform, I think you suggested, and still making investments in healthcare.

Will those investments be greater in 2015 versus 2014?

Will they be about the same?

So we'll think about the year-over-year comparisons.

Yes, Glen, as you can imagine, it's hard for me to answer that, because I'm not giving guidance today.

We are just really at the beginning of our planning process.

I just reiterate that we will have a continued cost as we ramp down legacy technology spend, particularly with the top of the ramp up to our new tech capabilities.

And then we'll continue to invest in healthcare.

Okay, so as we think about the year-over-year comparison, you don't want to give us guidance in terms of how big that inflection point could look like.

But you just want to signal to people that you are starting $0.60 in the hole, basically, given the run-off in the second half of 2014?

That's absolutely right.

Okay.

Jim, if I could shift gears.

I wanted to follow-up.

It seems like the Company has posted some obviously better results in Continental Europe.

I get it AsiaPac is an emerging market.

It's still small, but you still have some pretty decent growth there.

I'm curious as to what's working in the Continental Europe market, for example, that's not working in North America?

Are you are approaching those markets the same way?

Or is there something that explains the divergence in the results as much as it is?

I think there are a lot of moving parts.

At a high level, I think one of the biggest differences is the maturity of the competitive frame.

Things impacting the digital space in the United States are more aggressive and having a more substantial impact on routing out trials.

There are some other pluses and minuses, as I said.

We referenced France for one, which is having a particularly strong period of performance.

I want to bridge to that, because the comments I made about the future view around branding and our product offering, I think, relate back to something interesting in the French market.

We have what I would argue is a moderately aspirational brand position in France.

We get credit from the consumers in that marketplace for that.

We are less reliant on promotional-oriented advertising and have a better brand position and a better brand development set of marketing tactics.

So, amongst a couple of other things, that's putting that market out in front for us.

I think that that is one thing that we would look, in the aggregate, to other markets and say, there is potential in that.

Central to the strategy on reimagining our offering, as I said, is strengthening our brand and this is a good reference point for us.

If we can get the brand to occupy a stronger position with consumers, one that is a little more inviting, a little more open, a little more aspirational, that resonates better, we will be in a much stronger position.

So, as a specific, with respect your question, was there something different there that we can look to, I point at one for the future as well.

Okay, thank you.

Kurt Frederick, Wedbush.

I was wondering, for the 2015 launch, is that something that's consistent across all the geographies?

Or is it going to be more like a traditional where certain markets have different launches than the other markets?

I'm not going to share too much more detail.

It's safe to say that the strategies of personalization and community underpinning the direction for our offerings will be common across markets.

I wouldn't necessarily assume that everything's going to happen the same way at the same pace.

Okay.

On the number of meetings centers.

How it has that changed from the beginning of 2014 to the end of 2014?

Our retail footprint is being relatively stable through the year, in terms of the Weight Watchers branded centers, if you will.

Where we've been achieving the operating expense savings has been reducing the number of drop-in hours that we have and then also, consolidating smaller meetings.

We haven't been closing stores, per say, if you will.

Okay.

All right, that's all I had.

Thank you.

This will conclude our question-and-answer session.

I would now like to turn the conference call back over to Mr. James Chambers for any closing remarks.

Sir?

Once again, everyone, thank you for joining the call today and thank you for your continued interest in our Company.

We thank you, Sir, and to the rest of the management team for your time today.

The conference call is now concluded.

At this time, you may disconnect your lines.

Thank you and have a great day, everyone.