These Companies Are Counting On Your New Year’s Resolutions

By John Russell
Chicago Tribune.

New year, new you. And for plenty of companies, a new chance to cash in on your New Year’s resolutions.

From weight-loss clinics to fitness clubs, the first quarter of the year is the biggest opportunity of the year to sign up new members, sell gadgets, offer coaching services and watch the money roll in.

More than one-third of U.S. adults are considered obese. Meanwhile, losing weight and staying fit are at the top of the list of resolutions every year.

There are big bucks at stake. Gym, health and fitness clubs ring up about $30 billion a year, according to IBISWorld, a business research firm. Sporting goods stores, wholesalers and manufacturers count for nearly $100 billion. Weight-loss services, along with nutrition and dietitian services, pull in another $12 billion. Pilates and yoga studios count for $9 billion.

But it’s a tough, competitive world, and consumers can be choosy. Last year’s business big sellers and hot companies can be next year’s dead dogs. (Just think of Blockbuster, Kodak, Atari, Borders and Circuit City.) So the companies with the latest, greatest pitch have the best chance to have a happy New Year.

So let’s take a look at how some companies are positioning themselves.

For decades this was the gold standard for losing weight. Weight Watchers, founded in 1961, steadily rang up sales and profits by offering dieting programs, food and support centers for people trying to shed a few pounds.
But that was then.

In recent years, people have been migrating to digital gadgets that measure how many steps they walk, miles they pedal or floors they climb, like Fitbit activity trackers, Apple watches and free apps like MapMyRun.

That’s taken a big bite out of Weight Watchers. Membership fell last year to 800,000 from 1.4 million in 2008. Company revenues have slipped 11 straight quarters. The stock has fallen 71 percent from its peak in 2011.

But can Oprah Winfrey rescue the diet company? In October, she bought a 10 percent stake in Weight Watchers and starred in two promotional TV spots. “Are you ready? Let’s do this together,” she said.

The company’s stock has tripled since Oprah got involved, although it is still down about 7 percent from a year ago.

If you’re too confused by all the choices in a supermarket, Nutrisystem wants to take this job off your hands, for a price.
The company specializes in delivering portion-controlled, packaged entrees and snacks to your house, which you can add to with fresh produce and dairy. The company provides more than 150 menu choices. A basic plan of six small meals a day costs about $280 a month.

The company also sells its products at Wal-Mart, Costco, Kroger and other retailers.

Nutrisystem seems to have found a willing audience. Revenue last year increased 13 percent to $403 million. Profits nearly tripled to $19 million. And it keeps expanding its offerings. Two weeks ago, it bought the hugely popular South Beach Diet brand, which focuses on lean protein and vegetables, and will roll it into its meal-delivery program. The South Beach diet has more than 23 million books in print, signaling a huge opportunity.

Still, the company can’t tarry. Its stock has been essentially flat for the past two years and is down 30 percent from its peak in July.

And Nutrisystem keeps the message going. “The new year means new goals and resolutions for a healthier lifestyle,” its website says.

If you like fancy, one-stop health clubs, Life Time Fitness is one of the biggest and most luxurious in the game, with posh locker rooms, spas and cafes. “More like a resort than a gym,” the company says in its marketing materials.

Its 114 centers, mostly located in the suburbs, offer everything from weight rooms and swimming pools to a full range of classes for yoga, kickboxing, spin-cycling and other activities.

But those fancy amenities are a tough sell for budget-conscious shoppers. Like other high-end fitness operators, Life Time is struggling to win over Americans who are counting their nickels and dimes, and opting for lower-cost gyms. Life Time’s profits fell 6 percent last year.

“Many gyms still compete on the basis of price,” according to an industry research report by IBISWorld. “Gyms that have offered low-cost, contract-free memberships with fewer amenities have fared well.”

So in 2014, Life Time, the largest publicly traded gym operator, began looking for strategic alternatives. One option was to convert into a real estate investment trust, which would allow it to use its properties as collateral to fund future expansion.

In the end, Life Time agreed to sell itself in a leveraged buyout in March to private equity firms Leonard Green & Partners and TPG Capital for more than $4 billion. That will give it a break from Wall Street pressures.

In the meantime, it is doubtlessly hoping lots of Americans resolve to get in shape. At a high-end gym.

The mighty Nike doesn’t really need your cash. The giant of athletic footwear, whose products are worn and endorsed by super-athletes from LeBron James to Tiger Woods, is raking in money by the boatload.

Nike posted sales of $30.6 billion last year, up 21 percent from just two years earlier. In October, it said it expected annual revenue to grow by 63 percent to $50 billion by 2020. Its stock is one of the best performers on Wall Street.

So no, your shoe decision will not make or break Nike. But the company still wants you to “Unlock the Best of Nike”, which means paying a premium price for shoes, clothing and gear.

Will Americans on a budget dig deep and spend $225 on a pair of Air Max Premium running shoes? Or $120 for high-tech running pants with mesh panels “to provide optimal ventilation”?

They just might if they think that wearing them will make them as athletic as retired New York Yankee Derek Jeter. Nike is paying him $10 million to push the message that “hustle has no age limit.”

Nike might call it a hustle. For you, it’s just a New Year’s resolution.

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