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Increasingly popular weight loss medications not only benefit people by reducing their waistlines. They could be of great help for names of clothing items.
Based on a recent survey of its own, Stifel believes that losing weight could affect spending trends and, in particular, clothing.
Their consumer survey found that 15% of respondents take GLP-1 medications. Examples of these medications are Mounjaro (tirzepatide) from Eli Lilly (LLY) and Wegovy (semaglutide) and Ozempic (semaglutide) from Novo Nordisk (NVO).
While only Wegovy is FDA-approved for weight loss, Mounjaro is expected to gain that indication shortly and was recently boosted by a real-world study against Wegovy. The Stifel survey found that an additional 21% would be interested in taking a GLP-1 drug if others gained U.S. FDA approval and were shown to work effectively.
Stifel's Jim Duffy mentioned several retail names he sees as potential beneficiaries of increased GLP-1 uptake: Lululemon (NASDAQ: LULU), Levi's (LEVI), Kontoor Brands (KTB) and Dick's Sporting Goods (DKS).
Duffy told Yahoo! Finance in a recent interview that people who take a weight-loss medication and lose considerable weight would need new clothes “and would spend twice as much clothing annually.” He added that could generate a low- to mid-single-digit benefit in apparel spending, although it focuses on particular brands.
Based on the results, Duffy believes other industries could benefit from greater use of weight-loss drugs. “By sector/category, the use of GLP-1 is most beneficial for energy drinks, convenient nutrition, and clothing and nutrition for an active lifestyle.”
This could be good news for names like Celsius Holdings (CELH), Monster Beverage (NASDAQ:MNST), The Simply Good Foods Company (SMPL), BellRing Brands (BRBR), Mondelez International (NASDAQ:MDLZ) (owner of Clif Bar), General Mills (New York Stock Exchange: GIS) (various brands of protein bars) and WK Kellogg (protein bars).
