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Losing Weight Is Losing Ground in the Stock Market Weight-loss and nutrition companies have lost half or more of their value in the past year despite expectations of a postpandemic boom

Spencer Jakab Updated Sept. 12, 2022 12:12 pm ET

Herbalife Nutrition, HLF 2.32%▲ Medifast MED 0.79%▲ and WW International WW 1.91%▲ (formerly known as Weight Watchers) are all in the business of helping their customers shed unwanted pounds—a perennial battle that people in the developed world are slowly losing. About 70% of Americans are obese or overweight. The pandemic presented both a unique challenge and opportunity for companies that rely on human intermediaries to sell those products and services. On the one hand, in-person meetings were hampered. On the other hand, the dreaded “Covid 15” weight gain was thought to be creating pent-up demand—the inverse of the boom and bust that home-exercise equipment makers such as Peloton experienced.

But the past year has been a disaster for all three with their share prices down by between 44% and 73%, according to FactSet. Herbalife, which uses a multilevel marketing strategy and focuses more broadly on nutrition, had a surprisingly good performance during the heart of the pandemic. Yet it saw second-quarter sales this year fall by a little over 10% from a year earlier. Lockdowns in China hurt sales recently but North American sales also slumped, and the company lowered its full-year guidance for earnings per share.

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Medifast, which uses “coaches,” like WW, but has a model more akin to Herbalife and is run by executives with past multilevel marketing experience, is also flailing. Following second-quarter results that saw a 13.6% drop in earnings per share, it cut full-year revenue guidance sharply. Like Herbalife, it cited rising shipping and material costs for its meals as a factor.

Worst of the pack, though, was WW, despite the fact that it has moved away from food and kitchen-item sales. And though it relies on trained professionals rather than recruiting current and former customers like the others, it also has slimmed down its bricks-and-mortar presence.

Things weren’t supposed to be this way as in-person activities returned. Herbalife Chief Executive Officer John Agwunobi has blamed the pandemic’s lingering social effects. “Most of the distributors that joined Herbalife during the pandemic have never been to an in-person event, and there is no substitute for gathering in-person for learning, collaborating and motivating,” he said this spring.