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Increasingly popular weight loss drugs are not only benefitting individuals by reducing their waist lines. They could be a boon to apparel names.
Based on a recent proprietary survey, Stifel believes that shedding pounds could impact spending trends, and in particular, with clothing.
Its survey of consumers found that found 15% of respondents are on GLP-1 medications. Examples of these drugs are Eli Lilly’s (LLY) Mounjaro (tirzepatide) and Novo Nordisk’s (NVO) Wegovy (semaglutide) and Ozempic (semaglutide).
While only Wegovy is FDA-approved for weight loss, Mounjaro is expected to gain that indication shortly and was recently buoyed by a real-world study against Wegovy. The Stifel survey found an additional 21% would be interested in taking a GLP-1 drug if additional ones gained US FDA approval and were further demonstrated to work effectively.
Stifel’s Jim Duffy mentioned several retail names he sees as potential beneficiaries of greater 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 individuals who stick with a weight loss drug and lose considerable weight would need new clothes “and would spend double the amount of apparel on an annual basis.” He added that could lead to a low- to mid-single digit benefit to apparel spend, though focused on particular brands.
Based on the results, Duffy believes other industries could benefit from greater weight loss drug use. “By sector/category, GLP-1 usage is most beneficial for energy drinks, convenient nutrition, and apparel and active lifestyle nutrition.”
That 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 (NYSE:GIS) (several protein bar brands), and WK Kellogg (protein bars).
