The United States has a weight problem. In short, we are, as a people, getting fatter. Want evidence? Santa suits used to have added stuffing to make Jolly St. Nick look jollier. With up to a third of Santa Suits coming in the plus-size category today, no stuffing is need! Excessive weight is a bad thing, but investors can still make some money off of this trend.
Santa's Getting BiggerAccording to media reports, the largest size Santa suit made by Adele's of Hollywood has gone from a 50-inch waist to 76-inches. In the Santa suit business for forty years, Adele Saidy explained to United Press International that her Santa customers are getting “larger and larger.” Plus sizes now make up 25% of the business at Adele's shop, with 33% of Santasuits.com's business in the plus range (up from 12% in 1996).
The interesting thing about this little news bite is that it is symptomatic of the entire United States. Sure, Santa is supposed to be a big guy, but a 76-inch waist? Santa needs to go on a diet. A quick walk around a shopping mall or an amusement park will reveal that he's not alone.
Many IllsBeing overweight has many negatives associated with it. From a health care perspective, too many pounds leads to all kinds of issues from diabetes to heart problems. From a social angle, too much weight carries a stigma that can make people feel like outcasts. On a practical level, it can simply be hard to move around. The problem is so widespread that the First Lady has even made childhood obesity her hallmark issue.
Making Some MoneyWeight Watchers International, Inc. (NYSE:WTW) is probably the best option for investors looking to benefit from people trying to lose weight. The company has great brand recognition and a large network of stores. Both would be difficult for competitors to replicate. In fact, Weight Watchers has become such an institution in this country that it has begun to work with restaurants and food processors, giving a “seal of approval” to select foods.
One of the most compelling aspects of Weight Watchers is the community is builds. Indeed, one of the hardest parts of losing weight is keeping on track. (Thus the many broken New Year’s resolutions.) The regular meetings with similarly minded customers helps people stay the course and creates a stickiness to the business model.
Note that the company has a significant presence overseas, too, which offers growth opportunities to a business that doesn't require much capital for expansion. Another avenue for growth is the Internet. While this method for reaching customers doesn't allow for the same group connections, the company is working diligently to use technology to expand its reach and help its customers better track their progress.
Looking longer-term, there are also potential opportunities in the government and business arenas. As health care becomes a more important topic, it is likely that weight management efforts will also increase. Weight Watchers is an almost turnkey solution.
A dividend of 1.2% won't interest most income investors, however those seeking a way to benefit from an overweight nation, and world, would do well to keep an eye on Weight Watchers.
Another Company to WatchNutriSystem Inc. (NASDAQ:NTRI) is another weight management company that investors might want to review. The company claims to be the “number one home delivery weight loss company.” Essentially, it sells specifically designed weight management food programs. Meals are sold over the Internet, by phone, and through the retail channel, and largely delivered directly to customers' doors.
Unlike Weight Watchers, which allows participants to eat their own food but track it with a proprietary point system, NutriSystem controls just about every aspect of the eating process. This is fine as long as customers order the food, but doesn't actually train anyone how to eat. That's a weakness, though die-hard customers become annuity like income streams.