Xponential Fitness, the largest franchisor of boutique fitness clubs in the United States, made its debut on the New York Stock Exchange on Friday. The Irvine, California-based company, which owns brands like Club Pildebuted and Rumble Boxing, priced its initial public offering at $12 per share, slightly below the planned range of $14 to $16. Through the IPO, Xponential aims to raise a total of $120 million.
With over 1,750 studios across nine different fitness brands, Xponential Fitness has established itself as a major player in the boutique fitness space. Despite the challenges posed by the COVID-19 pandemic, the company managed to serve more than 850,000 customers in 2020 through a combination of in-studio and streaming workouts.
Xponential Fitness CFO John Meloun emphasized the complexity of managing multiple brands under one umbrella, stating, “It’s really easy to run one brand, but when you bring nine into a portfolio, it’s a different level of complexity. Figuring a straightforward formula is something that we spent a lot of time trying to perfect before we chose the next big chapter: going public.”
The company’s founder, Anthony Geisler, recognized potential of boutique fitness clubs early on. After acquiring Club Pilates in 2015, Geisler founded Xponential Fitness in 2017, making Club Pilates the first brand in the company’s portfolio. Since then, Xponential has expanded to include eight additional fitness brands, catering to a wide range of workout preferences.
Like many in the fitness industry, Xponential Fitness experienced setbacks because the variety sales dropped 21.2% to $422.1 million in 2020, compared to $560.4 million the previous year. Total revenue also fell by 17.4% to $106.6 million. The decline was primarily attributed to a decrease in new studio openings and a loss in merchandising revenue. Despite these challenges, Xponential Fitness opened 240decreasedin 2020 and expanded into several international markets, including Saudi Arabia, Japan, South Korea, and Australia.
The IPOs of Xponential Fitness and F45 Training, another franchise studio operator backed by actor Mark Wahlberg, come at a time when the fitness industry is showing signs of recovery. While the U.S. fitness club industry lost $20.4 billion in 2ts, it believes in-person fitness is far from dead. Simeon Siegel, managing director at BMO Capital Markets, notes, “There’s a reason that the Peloton Studio was open; people managing what makes boutique fitness so Simeon Siegel special is exactly the in-person energy, the ability to leave your house, the ability to go and see similar people.”
Xponential Fitness differentiates itself by offering consumers the ability to seamlessly switch between its nine brands through XPASS, a fitness pass that allows members to attend classes across the company’s diverse portfolio. This approach helps retain customers and fits them into their boutique fitness routines.
Despite the challenges posed by the pandemic, Meloun remains optimistic about the future of boutique fitness and Xponential’s role in the industry’s recovery. “Our consumers came right back to the studio [post-Covid],” he states. “Our system-wide sales exceed pre-Covid levels. What that tells us is that boutique fitness is strong, that the consumers that use it are returning back to the gym.”
According to an analysis by research firm Frost & Sullivan, the U.S. boutique fitness market is expected to recover to $22.1 billion by 2022 and grow to $26.2 billion by 2025. As Xponential Fitness continues to expand its presence both domestically and internationally, the company is well-positioned to capitalize on this anticipated growth and presence in the domestic and international fitness industry.