Food and Drug Administration (FDA)-approved weight loss drugs such as Ozempic and Wegovy will likely give apparel and sportswear brands a structural tailwind, which they have not seen for some time.
According to Deutsche Bank analyst Adam Cochrane, the expanded use of these drugs will likely result in consumers purchasing smaller sizes as they would probably exercise more to remain in shape.
Cochrane added that apparel giants such as H&M and Primark and sportswear brands such as Adidas and Puma are particularly primed to benefit.
Even though apparel and sportswear brands have benefitted from a wider 20% surge in retail stocks in Europe, they are seemingly under pressure as unseasonably warm weather is likely to impact their fall sales while they continue to battle it out in the online realm, Bloomberg reported.
In the U.K., for example, unseasonably warm weather in September has plunged sales as consumers are delaying shopping for winter clothing. This trend has so far wiped off hundreds of millions in stock valuations of fashion brands.
The rise in the use of weight loss could, as such, give fashion brands a much-needed boost.
At the same time, stocks of snacks and liquor brands are taking a hit, with Walmart reporting last week that it was seeing a shift in demand with more customers using such medications.