S&P lowers Weight Watchers view to negative

S&P said it revised the outlook on Weight Watchers International Inc. to negative from stable and affirmed all of its ratings, including its B+ issuer credit rating.

The company's performance fell short of expectations because of the weak 2019 winter recruiting season due of intensified competition and an ineffective marketing campaign, S&P said.

This resulted in weaker sales, margin erosion and deteriorated credit measures, the agency said.

S&P said it expects the company to continue to face top-line pressures in 2019 with leverage forecasted to increase to the high-4x range at the end of 2019, from 3.8x at year-end 2018.

The negative outlook reflects the risk that the company could fail to stabilize declining sales and margins because of intense competition, the agency said, and because leverage could increase to higher than 5x.

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