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Many Americans added the dreaded “COVID-19 pounds” or more during the pandemic, which could have a long-lasting impact on food companies, health and wellness businesses, and apparel brands and retailers, according to Barclays.
The bank’s credit analysts cite data sources showing an average American weight gain of 1.5 to 2 pounds per month during the lockdown with younger consumers, including millennials, gaining more than Gen X and boomers. Weight gain has also skewed higher for those who were under lockdown restrictions for a longer period of time.
Many companies have said they expect that certain dining habits developed during COVID will stick around once the pandemic is over, such as eating at home.
“In 2018, if we had proposed that Millennial and Generation Z demographics would have a preference for higher caloric packaged food and would gain a significant amount of weight, it would not have been taken seriously,” analysts led by Hale Holden wrote.
“A reversion to a preference for healthier fresh food could have implications for all
the center-of-store manufacturers that got a ‘second lease on life’ in the past 18 months.”
Before the pandemic, few consumers had a taste for food and drink with high sugar content.
As the effort to lose those COVID pounds gets under way, Barclays says sugar could become an ESG (environmental, social and governance) cause on par with eco-issues like carbon footprint.
“While we are starting to see some shifts in areas like sugar content, we have not seen a sharp acceleration in terms of level of adoption, nor have we seen increased sensitivity in holding exposed names,” analysts said.
“But as ESG sensitivities develop, we think this will increasingly become a greater
focus.”
Barclays rates investment-grade bonds issued by General Mills Inc
GIS,
Conagra Brands Inc.
CAG,
and Mondelez International
MDLZ,
at underweight.
Analysts rate WW International’s
WW,
high-yield secured bonds that mature in 2029 at overweight.
New bodies and changing fashion trends will benefit some fashion companies, like Levi Strauss & Co. LEVI which has talked about how the popularity of looser denim styles will benefit that company after years of skinny jeans.
Analysts expected heightened demand as mobility improved and people headed back to work, events and on vacation. Consumers are also pushing for more size inclusivity, which is driving access to a wider range of sizes, for instance, at Gap Inc.
GPS,
brand Old Navy. Torrid Holdings Inc.
CURV,
a plus-size retailer, was also among the many IPOs that have taken place this year.
Shoppers want to update their closets, or need to because of a change in clothing size, though the supply chain could put a damper on that impulse to spend.
See: A pandemic wardrobe purge is sweeping across the country as normal life resumes
“While it is difficult to predict what will change the course of apparel demand, we think the 2021 holiday sales period could represent a meaningful increase in demand trends,” the report said.
And with so many people getting rid of clothing they can no longer wear, or no longer want to wear, secondhand businesses like ThredUp Inc.
TDUP,
should see benefits.
Barclays has overweight ratings on Nordstrom Inc.’s
JWN,
high-yield bonds that mature in 2024, 2027, 2028, 2030 and 2031, an overweight rating on Macy’s Inc.’s
M,
high-yield bonds that mature in 2029 and overweight ratings on Gap’s high-yield bonds due 2029 and 2031
The SPDR Bloomberg Barclays High Yield Bond ETF
JNK,
has slipped 0.2% for the year to date. The iShares iBoxx $ High Yield Corporate Bond ETF
HYG,
is down 0.3%. The Consumer Discretionary Select Sector SPDR Fund
XLY,
has gained 12.4%. And the benchmark S&P 500 index
SPX,
is up 16.2% for the period.
