Weight Watchers shares rocket higher on plan to rebrand, target $2 billion in sales by 2020

  • Weight Watchers will offer teens ages 13 to 17 free memberships this summer.
  • Weight Watchers said on Wednesday that it is rebranding itself as part of its plan to help 10 million people adopt healthy habits and grow its revenue to more than $2 billion by the end of 2020.
  • The company famous for counting points recently unveiled WWFreeStyle with spokeswoman Oprah Winfrey.
  • The new program is more flexible than previous plans.
Weight Watchers International Inc. food products.
Michael Nagle | Bloomberg | Getty Images
Weight Watchers International Inc. food products.

Weight Watchers will offer teens ages 13 to 17 free memberships this summer as part of its plan to help 10 million people adopt healthy habits and grow its revenue to more than $2 billion by 2020.

Weight Watchers reported $1.16 billion in revenue at the end of 2016.

The company said it is rebranding to focus itself on the purpose of "inspiring healthy habits for real life," CEO Mindy Grossman said Wednesday. The move mirrors a trend in the health and wellness industry toward overall wellness as people shun diets.

Weight Watchers recently unveiled WWFreeStyle with spokeswoman Oprah Winfrey. The new plan is more flexible than previous programs. Carb-cutting plan Atkins announced a similar approach last month.

Weight Watchers also announced Wednesday it would remove artificial ingredients from its branded food products.

Shares of Weight Watchers soared 16 percent on Wednesday. They've surged about 490 percent over the last year.

Another element of its plan, attracting young new members, could draw criticism.

Weight Watchers said it wants to partner with families to establish healthy habits by offering free memberships to help "the development of healthy habits at a critical life stage," it said in a press release ahead of its global employee event on Wednesday.

Teens will be required to go to one of its meeting locations with a parent or guardian who will provide consent. Weight Watchers said it will share more specific criteria and guidelines when it launches the program.

"We think there's a real opportunity to make an impact on a problem that is not currently being addressed effectively," a Weight Watchers spokeswoman told CNBC.

Federal and local governments have tried to tackle adolescent obesity, which continues to plague the U.S., though its prevalence has leveled off. Efforts have focused on getting teens to drop processed foods and sugary drinks while getting them to move more.

Encouraging teens to count calories and diet is dangerous, said Tomi Akanbi, clinical nutrition coordinator at the Mount Sinai Adolescent Health Center. She sees patients who adopt their parents' weight-loss plans, not realizing that teens need to eat certain foods to help them grow.

When teens focus on calories, she said, they tend to skip meals and eat too little or replace them with empty calories from sugary sources like soda. Instead, she encourages teens to create a diet that's heavy in fruits, vegetables, protein and grains and void of refined starches and sugars, mixed with at least an hour of daily exercise.

"Weight Watchers really is dieting and focusing on just weight, and research has shown when the focus is on weight and dieting in teens, that is not an effective way to promote and sustain weight loss," Akanbi said. "It's not even helpful to promote overall wellness because we're also talking about body image and how these kids are experiencing themselves and food and their bodies, and dieting does not help with that."

On the far end of the spectrum, she said, counting calories and focusing on weight can lead to eating disorders. Advocates have pushed to improve body image among teens, especially teenage girls.

In a statement, the National Eating Disorders Association said it's "very concerned" about Weight Watchers' promotion because 35 percent of "normal" dieters can develop disordered eating and teens are at an especially vulnerable stage of life.

"Half of teenage girls and one-third of teenage boys use dangerous weight control methods – such as smoking, laxative abuse, and skipping meals – in an attempt to meet unrealistic body ideals," a spokeswoman said. "We hope Weight Watchers acknowledges the risk and implements steps to screen for potential early signs of disordered eating and provides information on resources to find help."