Clothing Stocks Seen as Latest Winners From Weight-Loss Drugs

The boom in weight-loss drugs is set to provide a boost to sportswear brands and clothing retailers, according to Deutsche Bank AG analysts.

Slimmer people will likely need to purchase smaller sizes and will be motivated to exercise more to keep the weight off, analyst Adam Cochrane wrote in a note.

He identified sports wear makers Adidas AG and Puma AG as potential beneficiaries, along with apparel retailers Inditex SA, Hennes & Mauritz A/S and the Primark chain owned by Associated British Foods Plc.

Cochrane said the class of drugs known as GLP-1s, which include Novo Nordisk A/S’s Ozempic and Wegovy injectables, could provide a “structural tailwind” for the apparel industry that hasn’t been seen “for some time.”

While retail stocks are this year’s top performers in Europe, rising 20 percent, they have come under pressure recently on worries that unseasonably warm weather could hurt their autumn sales, in addition to intense competition in the online space. A recent warning from fast-fashion retailer Boohoo Group Plc has also underscored the strains customers are under from inflation.

The fast-growing popularity of weight-loss drugs is causing ripple effects across the stock market, for the makers of everything from snacks to booze. Last week, Walmart Inc. said it’s seeing an impact on demand from people taking such medications. Shares of kidney dialysis providers fell on Wednesday after Novo Nordisk said it was halting a study on the impact of Ozempic on kidney failure after it showed effectiveness surprisingly early.

By Paul Jarvis and Kit Rees

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