Nutrisystem Inc NTRI is now eyeing a strategic brand acquisition to expand its product portfolio and market share. The company recently announced the acquisition of South Beach Diet brand from SBD Holdings Group for $15 million.
Created by renowned cardiologist Dr. Arthur Agatston, South Beach Diet’s focus is on helping people lose weight. The brand’s books have appeared on the New York Times bestseller list and more than 23 million copies have already been sold.
Nutrisystem will acquire all registered copyrights, trademarks and domain names from SBD Holdings Group, which will continue to own the diet till Jul 1, 2016. Meanwhile, Nutrisystem will make investments in product development, marketing and e-commerce for a planned re-launch of the South Beach Diet in 2017.
Capital expenditures are anticipated to be approximately $2 million in 2016. The deal is expected to be slightly dilutive to Nutrisystem’s earnings in 2016, but will be accretive in 2017, driven by the re-launch of the program in both the direct-to-consumer and retail channels.
Meanwhile, Nutrisystem recently announced the all-new Turbo10 program that promises weight loss of up to 10 pounds and five inches overall within the very first month.
Last month, the company introduced a new packaging design, new and improved foods with no artificial flavors, colors or sweeteners and easy-to-understand nutritional labels and a wide range of fresh-frozen food for customers. Notably, Nutrisystem’s food portfolio offers more than 150 items.
No doubt, the new offerings will attract new customers apart from improving customer retention rate. As such, Nutrisystem expects customer paid length of stay to improve by over two days in full-year 2015 from the prior year.
For full-year 2016, Nutrisystem expects strong revenue per customer, which will boost profits and also support its acquisition activities. The company noted that its diabetes products are top-sellers in the retail space and an important part of its direct business. Hence, the diabetes suite will continue to drive top-line growth. The company expects to launch new products to address another health segment in 2016.
We believe that Nutrisystem’s improving traction in retail market and improved customer retention are key catalysts for 2016 and beyond.
Zacks Rank & Other Key Picks
Currently, Nutrisystem carries a Zacks Rank #2 (Buy).
Other favorably ranked stocks include AMN Healthcare AHS, INC Research INCR and PRA Health Sciences PRAH. All the three stocks sport a Zacks Rank #1 (Strong Buy).
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Be the first to comment