Moody’s drops Weight Watchers, debt to B3

Moody's Investors Service said it downgraded Weight Watchers International, Inc.'s corporate family rating to B3 from B1, probability of default rating to B3-PD from B2-PD and senior secured debt ratings to B3 from B1.

The speculative grade liquidity rating was affirmed at SGL-3.

The outlook remains negative.

"Moody's expects Weight Watchers will continue to experience double digit declines in subscribers, pressuring revenues, profits and free cash flow, and driving very high financial leverage," Moody's senior credit officer Edmond DeForest said in a news release.

The downgrade of the corporate family rating reflects the agency’s expectation for revenues to decline to about $1.2 billion in 2015, with the potential for further material declines in 2016 unless new programs and marketing initiatives stabilize the membership base.

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