Nutrisystem dedicates senior executive resources against retail expansion channel strategy

FORT WASHINGTON, Pa. — Nutrisystem feels it has a role to play in helping Americans meet their health-and-wellness goals, the company's chief executive shared with analysts on Tuesday. And that role may play out in retail. 

"New healthcare legislation creates an opportunity for Nutrisystem to take a leadership role in health management by helping consumers, healthcare professionals, employers and insurance companies tackle obesity and the chronic conditions that often accompany it, such as diabetes and heart health," noted Dawn Zier, Nutrisystem president and CEO. "We believe demand for Nutrisystem will increase as obesity reduction and preventive measures become incentivized by insurers and employers as the weight of overall healthcare cost," she added. "We have appointed a senior level executive to own this growth opportunity and are expanding existing partnerships, as well as developing new ones." 

One of the strategies on which Nutrisystem is focusing is retail distribution. The company recently expanded its pilot testing the sales draw of the company's Nutrisystem D 5-Day Jumpstart Weight Loss Kit with Walmart from 2,000 stores to 3,700 stores. Sales are doing well, Zier said. "Our Walmart initiative is making a meaningful contribution to revenue and profitability, and we are excited about the opportunity to grow in the retail channel."

Zier suggested it won't stop at the mass channel for retail distribution. Nutrisystem also has had product available in the supermarket channel through Kroger and in club with Costco. Could the drug or convenience channels be next?

"We are in the process of developing a channel and product strategy to complement our success with the 5-Day Kit," Zier told analysts. "We are taking a deliberate approach towards our retail expansions, and we are very carefully looking at retail margins since they can vary by structure."