From record revenues to waning demand, connected fitness frontrunners are correcting course.
Need to know: Equipment maker iFIT Health & Fitness secured a $355M investment amid a company-wide restructuring, including layoffs and leadership shakeup.
Of note, iFIT’s valuation was trimmed to $3B in the new funding round, a 60% reduction from its previous $7B+ mark, per Bloomberg.
Behind the scenes. On the heels of job cuts made in December, iFIT announced a new round of layoffs last week.
The company declined our request for specifics on the number of people impacted. However, iFIT shared details on related developments:
- Co-founder and chairman Scott Watterson is relinquishing the CEO role, handing the reins to newly appointed co-presidents Steve Barr (chief financial officer) and Mark Watterson (chief experience officer).
- The company “amicably resolved” a $300M lawsuit with existing investor Pamplona Capital Management.
For context. Parent company of NordicTrack, ProForm, and Kayla Itsines-founded SWEAT, among other fitness brands, iFIT pulled the plug on a planned $650M IPO last year.
Since then, the company has reportedly burned capital as expenses rose and sales of its home fitness equipment declined.
On the bright side. With 7.3M subscribers across 120 countries, and revenue of more than $1.7B in fiscal 2021, the company said the restructuring will make it “stronger and leaner” going forward.
Zooming out: As we detailed in Issue No. 169, after two years of on-again, off-again gym closures and a workout-from-home boom, the fitness industry is recalibrating.
From Peloton and MIRROR to Beachbody and, now, iFIT, home fitness brands are battling reopening headwinds. While a gym resurgence and slowing sales are partly to blame, chasing growth at all costs is proving to be, well… quite costly.
As Peloton laid off 2,800 employees and enlisted a new CEO, founder John Foley said the company had been “undisciplined.” Similarly, iFIT said a “lack of focus” can result from high growth.
Now, both companies have their work cut out for them as they plot a new, more realistic path forward.