Pure Barre Parent Sees Boutique Fitness Recovery In 2022

Xponential Fitness announced that it intends to reduce the franchise’s revenue despite a pandemic last year. However, the parents of Pure Barre, Club Pilates and CycleBar have announced that they will be back to boutique fitness by 2022 and once again grow faster than the wider fitness club industry.

Xponential Fitness said it has commissioned Frost & Sullivan to conduct an independent analysis to assess the entire target market in the U.S. boutique fitness market emerging from the pandemic. According to the study, the total market opportunity was $ 21.1 trillion in 2019 and is expected to recover to $ 22.1 trillion by 2022. The industry is expected to grow at a CAGR of 24.5 percent, from $ 8.8 billion in 2020 to $ 20.2 billion for $ 20.2 billion.

It was noted in the presentation that the fitness boutique experience continues to stand out from its fitness coaches and community parties compared to the average gym experience.

“The boutique is built around a social and supportive association of fitness trainers, coaches and consumers to help each other achieve their fitness goals,” Xponential Fitness wrote in the file. “A boutique fitness workout typically offers more personalized programming and a more intensive experience compared to a traditional health and fitness club with increased personal attention and guidance.”

However, the overall recovery of the gym space is expected to help increase consumer interest in post-pandemic health and well-being and interest in returning to gyms.

According to the IHRSA survey conducted in October 2020, more than 85% of fitness club users reported that physical exercise had changed, with 50 percent reporting dissatisfaction with new workout routines, being “less consistent”, “less difficult” and / or simply worse “. Ninety-four percent of respondents said they would return to the gym, with 95 percent losing at least one aspect of being physically in the gym and 68 percent prioritizing their health before the pandemic.

In addition, according to projections published in Kentley Insights in January 2021, the U.S. health and fitness club industry revenue is expected to recover $ 34.1 trillion in revenue in 2021 and grow at a 5 percent CAGR after $ 41.3 billion in revenue by 2025. .

Xponential Fitness says its growth will reap the benefits of three post-pandemic wind emissions:

  • Raise awareness of active living and the health benefits of physical exercise;
  • Fitness participation increased, especially among Millennials and Gen Z, as in 2019 there were about 50 percent of all health and fitness club members; and
  • Increased levels of pandemic stress and a desire to elevate mood by exercising and participating in a fitness community.

In the Risk Factors section of the analysis, Xponential Fitness warned that the company had risks associated with changing behavior around fitness. The company stated: “For example, during the COVID-19 pandemic, many of our members switched to home training. We cannot predict that the level of our active members will return to the same level as the franchisees that existed before the COVID-19 pandemic. “

Prior to the pandemic, the S-1 file showed that boutique fitness was on the rise.

The IHRSA estimated that between 2015 and 2019, membership in boutique studios increased by 29 percent, almost double the growth of the health and fitness club industry by nearly 15 percent. According to the IHRSA, 42 percent of U.S. health and fitness club participants achieved boutique fitness membership in 2018, up from 21 percent in 2013.

Overall, before the pandemic, the U.S. health and fitness club industry has been growing for more than 21 years in a row. Since 2004, the industry has grown 6% CAGR from approximately $ 14.8 trillion in 2004 to approximately $ 35.0 billion in 2019.

However, the pandemic had an impact on the final results.

In the year ended December 31, Xponential Fitness’s total system sales fell 21.1 percent in 2019 to $ 560.4 million from $ 442.1 million, while full system sales increased 44.0 percent in 2019.

The company’s total revenue, including franchise fees, sales of equipment for franchisors and sales of merchandise, was $ 106.6 million in the year ended December 31, down 17.4 percent. The decline was due to a significant decline in equipment revenue due to a reduction in new studio openings caused by the pandemic and, to a lesser extent, revenue from the closure of temporary studios and reduced use due to the pandemic.

Xponential Fitness opened 240 new studios in 2020, compared to 394 new studios opened in 2019.

Among the major revenue components in 2020, franchise revenue was $ 48.1 million in 2020, and $ 47.4 million in 2019; equipment revenue was $ 20.6 million in 2020, compared to $ 40.0 million in 2019; and merchandise revenue was $ 16.6 million, up from $ 22.2 million.

Sales at the same store fell 34% in 2020, after gaining 9% in 2019 and 8% in 2018. It was 14 percent in the nine quarters ended March 31, 2021. Sales at the same store fell 24% in the three months ended March 31.

The net loss in 2020 was $ 13.6 million compared to $ 37.1 million a year ago and in 2018 it was $ 42.5 million. Adjusted EBITDA last year reached $ 9.81 million against $ 16.5 million in 2019 and a loss of EBITDA of $ 10.6 million in 2018.

Last year’s earnings had a credit of $ 11.0 million for contingencies and transaction expenses related to the non-monetary change in contingencies related to business purchases in 2017 and 2018. Expenses related to acquisition and transactions totaled $ 7.9 million in 2019. Shopping Club Pilates and CycleBar in September 2017, Stretch Lab in November 2017, Row House in December 2017, AKT in March 2018, Yoga Six in July 2018, Pure Barre in October. 2018, Stride in December 2018 and Rumble in March 2021.

Xponential Fitness said it absorbed franchise territory sales commissions, technology fees and digital platform costs in 2020 and pulled lower operating costs, including marketing costs, as operations had reductions in 2020.

The final economic results of the Xponential Fitness platform and other highlights of the growth are:

  • The number of open studios in North America rose from 813 to December 31, 2017 to 1,712 to December 31, 2020, representing a CAGR of 28 percent, and the number of open studios in North America to March 31, 2017. From 2020 to 1,765 on March 31, 2021;
  • Cumulative North American franchise licenses were sold from December 31, 2017 to 1,498 to 3,273 as of December 31, 2020, representing a 30 percent CAGR, and North American franchise licenses were sold to 3,371 as of March 31, 2021. As of March 31, 31, 2021, franchisees had a contract to open 1,391 more studios in North America. In addition, as of March 31, 2021, Xponential Fitness had ten studios open internationally, and franchise masters were contracted to sell licenses to franchisees to open 693 more studios in nine countries.

The company bills itself as “the largest boutique fitness franchise in the United States. Its brands include Club Pilates, the nation’s largest Pilates brand; CycleBar, the state’s largest cycling brand; and low-impact indoor rowing training; AKT, a combination of dance-based cardio training, toning, interval and circuit training; YogaSix, the largest franchised yoga brand; Pure Barre, full-body training, for small isometric movements using a ballet bar; Stride, tape motor the concept of cardio and strength-based training, and Rumble, a boxing-inspired full-body workout that the company served more than 850,000 customers in 2020 through studio and streaming training during the pandemic.

“Our brand’s diversified portfolio includes a variety of vertical fitness and wellness, including Pilates, barbell, cycling, extension, rowing, yoga, boxing, dancing and running,” the company wrote in its S-1. “Using a network of more than 1,400 franchises, we can leverage well-known and proven fitness modalities to spread boutique fitness experiences around the world and effectively.”

Xponential Fitness wants to raise $ 100 million through its IPO, even if it’s just a placeholder value, and the number can vary. The number of shares to be sold and the expected price were not disclosed. The plans call for Xponential to be traded on the New York Stock Exchange with the “XPOF” marker symbol.

Photos by Xponential Fitness