Wells Fargo Securities downgraded its stock rating on Nike Inc. and Deckers Outdoor due to the potential impact of increased adoption of GLP-1 medications like Ozempic and Wegovy but believes the overall apparel sector will see a major benefit from the roll-out of weight-loss drugs.
“There are few opportunities to become bullish on apparel…and this is one,” said Ike Boruchow, lead analyst in the apparel and foottwear sector for Wells Fargo in a recent note. “Our work shows GLP-1 adoption + further penetration is behind a mega-trend that can drive robust demand in US apparel (esp in cats sensitive to sizing) for multiple years.”
Wells Fargo estimates that GLP-1 has driven a 100 basis-point lift to the apparel category’s growth in 2024 and 120bps in 2025 and has the potential to drive an incremental 160bps to 2026, 170bps to 2027 and 30bps to 2028E.
“Apparel is already seeing the benefit that coincides with the adoption of GLP-1, our industry checks confirm the connection, and our proprietary consumer survey provides the evidence and numbers supporting our forecast and bullish take,” wrote Boruchow.
Well Fargo’s research found that the popularity of GLP-1 drugs has “significantly increased” as less-expensive options have reached the marketplace. Boruchow said. “There is clearly a potential for significant penetration expansion in the short-to-midterm, with catalysts for further adoption as barriers come down in the form of lower cost, increased supply and accessibility, and new modalities.”
He added that although publicly-held apparel companies have not directly called out the potential benefit from GLP-1, Wells Fargo checks within the industry show that sizes have shifted smaller and retailers and brands have adjusted accordingly, with the benefit of increased spend. Boruchow wrote, “Spending is centered on two events: 1) the initial weight loss < 6 months and 2) the settled weight post usage. US penetration today is around 12% of adults and changes in regulation, increased availability, lower cost from generics and new modalities (such as the pill) are driving future adoption. Lastly, international markets are likely smaller at maturity, but represent a meaningful growth driver over the next two years.”
Wells Fargo further conducted a proprietary survey of roughly 1,000 consumers and found that GLP-1 users spent over 40 percent more on clothing annually than non-users, replacing a greater share of their wardrobes and expressing stronger intent to keep spending. Bottoms and bras were cited as the highest-priority purchases.
From a category perspective, the analyst sees footwear and athletic apparel as “underperformers” within the movement toward GLP-1 adoption. As a result, he said he has become “more negative” on footwear and athletic stocks, citing Academy Sports, Deckers Brands, Dick’s Sporting Goods, Lululemon and Nike. He downgraded Nike Inc. to Equal Weight from Overweight and Deckers Brands to Underweight from Equal Weight.
The analyst wrote that on relative basis, footwear does not benefit from size changes associated with weight loss while he sees GLP-1 users replenishing their casual apparel wardrobes at a faster rate than their athletic apparel.
“While shoe size can change marginally from weight loss, it is certainly not the main benefactor relative to clothing,” wrote Boruchow. “Further, while people on GLP-1 did indicate they are buying more leisure clothing (such as hoodies and leggings) and are making more healthy lifestyle choices (exercising more), it is perhaps even more condemning that the athletic subsector is still performing as poorly as it has been even with the benefit. It is clearly multi-faceted – and we believe this is from the additional overlay of the shift away from the athleisure category post-COVID and incremental competition flooding the market.”
At the same time, Boruchow said he is “incrementally positive” on intimates, dresses, denim and fashion apparel, with a focus on bottoms and other categories sensitive to sizing. Wells Fargo reiterated its Overweight ratings on Kontoor Brands, Levi Strauss & Co., Gap Inc., Burlington Stores, Ross Stores and ThredUp Inc., seeing those stocks “as compelling ways to play the theme.”
A recent insights column from Circana, the retail data tracking and advisory firm, confirms that the much-buzzed-about ripple effect is real with GLP-1, “with waves expanding beyond food and beverage into a host of non-food and general merchandise segments.”
Circana noted that as of fall 2025, 23 percent of U.S. households had at least one GLP-1 user on an annual basis, an increase of 4 percentage points from the prior year. Circana projects that households using these medications will represent 35 percent of all food and beverage units sold by 2030.
“With growing usage comes reshaped consumer spending patterns. Those behaviors are tied to both shifting mindsets and physical characteristics as well as appearances,” the firm suggested.
The company went on to say that GLP-1 usage is impacting many forms of wearable merchandise. A Circana survey cited in the story revealed that 55 percent of active users have purchased new clothing or footwear, driven primarily by changing sizes. “Moreover, a quarter of users report that they have updated their wardrobes to refresh their appearance,” the firm said.
Wells Fargo also upgraded Victoria’s Secret & Co. to Overweight while “leaning more positive” on Urban Outfitters, which he is keeping the stock at Equal Weight. Boruchow wrote, “While leisure and athletic do see some benefit from GLP-1 usage, we believe users are already stocked up when they look at their wardrobe from the last 5 years – the incremental purchase is for more casual clothing to elevate their look. Additionally, our checks indicate that bras is the highest priority item for the female consumer, and our survey further confirms it to be one of the highest priority purchases for the female consumer.”
Boruchow also reduced his price target on Nike to $45 from $55 and on Deckers Brands, the parent of the Hoka and Ugg brands, to $90 from $115 per share. In lowering his rating on Nike, Boruchow also cited the brand’s heavy footwear exposure and ongoing international challenges, including double-digit sales declines in Greater China and elevated inventory in Europe. The Deckers Brands downgrade also reflected the increasing competitive pressure its Hoka brand faces from Nike’s efforts to revitalize its running category.
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See below for related SGB Media coverage of GLP-1 adoption:
EXEC: Bernstein Forecasts Potential $13B Annual Apparel Spend Boost from GLP-1 Adoption
