Issue No. 196: Wild Ride

Navigating demand shifts and economic uncertainty, the fitness industry is still in flux.

Today, we’re breaking down recent developments, earnings calls, and strategic initiatives across the industry.

Ups and Downs

Following the death of gyms and the workout-from-home gold rush, all signs pointed to the return of in-person exercise.

But, as some brick-and-mortar brands get back to business, other prominent names are shuttering studios. Meanwhile, faced with shrinking sales, digital and connected fitness companies have endured significant layoffs.

Still, despite the ups and downs, the overall industry is seeing a resurgence.

By 2025, the global fitness and exercise market will surpass $1.2T.
As of this June, monthly US gym visits are outpacing 2019’s foot traffic.
This year, the US boutique studio category is expected to reach $22.1B, surpassing pre-pandemic levels.

Gaining Ground

Planet Fitness. Reaching 16.5M members, the budget gym chain saw systemwide sales top $1B in Q2.

Of note, Gen Z is the fastest-growing demographic among Planet Fitness members — 15% of all US high-school-age teens are enrolled in its free summer pass program or are paying members.

Outlook: Despite recession concerns, CEO Chris Rondeau believes Planet Fitness will thrive, noting that the company added 1.1M members and doubled its location count during the 2007–09 financial crisis.

Life Time. Eyeing $1.8B in 2022 revenue, premium health club operator Life Time reported membership and sales growth in Q2.

Pursuing its Athletic Country Club vision—think gym, pools, sports courts, cafe, and more—the company is investing in new programs, including workouts for members over 55 years old, hiring hundreds of personal trainers, and going all-in on pickleball.

Outlook: Citing the macroeconomic situation, Life Time trimmed full-year guidance and hiked prices. But, CEO Bahram Akradi remains confident in the company’s “healthy living and healthy aging” approach.

Xponential Fitness. Notching its eighth consecutive quarter of growth, Xponential posted sales and membership gains in Q2.

Thanks to a series of acquisitions, product initiatives, and signed franchise agreements, the boutique studio franchisor was able to weather the pandemic, accelerating once restrictions were lifted.

More specifically, the company’s all-access XPASS, digital offering, and growing B2B efforts lifted the brand. International expansion, including studios in the Australia and New Zealand, will help it reach 500+ new locations this year.

Outlook: According to CEO Anthony Geisler, the economy won’t slow Xpo down. Instead, Geisler said most members have household incomes north of $130K and “do not view fitness as discretionary spend.”

Missing the Mark

As gyms rebound, the recovery isn’t evenly distributed.

SoulCycle. The indoor cycling chain is closing 19 studios (~25% of its footprint) and laying off 75 employees.

According to CEO Evelyn Webster, customer behavior is shifting and riders haven’t returned en mass. As a result, some markets—like NYC—were oversaturated, leading to closures.

After pulling its IPO bid in 2018, the Equinox-owned company debuted its own smart bike the next year. Missing the home workout boom, Webster told Fitt Insider the company doesn’t comment on bike sales.

Outlook: While its parent company pursues an on-again, off-again public offering, SoulCycle is drifting further from its mid-2000s heyday.

F45 Training. Last month, the HIIT studio franchisor cut 45% of its corporate staff and saw CEO Adam Gilchrist depart.

Made official, the company slashed 2022 projections for new studio openings, revenue, and EBITDA. It’s also pressing pause on expansion and shelving nascent concepts like FS8. Plus, funding for franchise development has been pulled.

Outlook: Interim CEO Ben Coates said demand for F45 remains strong, but its stated goal of 20K+ worldwide studios feels out of reach for now.

Peloton. After changing CEOs, cutting nearly 3,600 jobs, outsourcing manufacturing, closing storefronts, and raising the price of its Bike+ and Tread, Peloton’s restructuring isn’t done yet.

Now, the company is retooling its bikes for at-home assembly and could stream its content to rival equipment brands.

Outlook: Shifting its focus from premium hardware to scalable content/software, Peloton is distancing itself from the playbook it helped write. Which begs the question: Where does connected fitness go from here?

Elsewhere. Following lackluster earnings, Beachbody and Nautilus are searching for a sustainable path forward. Similarly, in the wake of layoffs, Tonal, Hydrow, iFIT, and others are retooling. Meanwhile, Italy’s Technogym is staying the course, bolstered by its premium brand and multi-channel model.

Punchline: Hopping off the reopening roller coaster and into volatile economic waters, the fitness industry is still grappling with pandemic-era fallout.

🍎 Real-time Health Insights

Beyond step tracking or calorie counting, glucose monitoring promises to revolutionize weight loss, metabolic health, and more.

On the Fitt Insider Podcast: Sharam Fouladgar-Mercer, CEO of Signos, discusses his CGM-centered weight management platform.

We also cover: the role of glucose in the obesity epidemic and leveraging AI to deliver sustainable behavior change.

Listen to today’s episode here

🆘 Challenges Ahead

Fitness isn’t the only sector facing headwinds. The broader wellness world is feeling the effects.

The latest: Meditation app maker Calm is laying off 20% of its staff while plant-based meal delivery company Daily Harvest parts ways with 15% of employees.

Calm. Valued at more than $2B after a 2020 funding round, Calm is cutting 90 jobs.

According to CEO David Ko, who came to Calm via an acquisition of his company Ripple, the decision is intended to “prioritize the future, focus on growth and become a more efficient organization.”

In addition to confronting economic uncertainty, digital meditation and mental health companies have also seen interest fall from pandemic highs.

Daily Harvest. On the heels of a product recall that sickened and hospitalized customers, Daily Harvest laid off nearly 50 workers.

Despite notching a $1B+ valuation last year, the meal kit service is still working to contain the backlash from its tainted Lentil + Leek Crumbles amid the workforce reduction.

Looking ahead: Unfortunately, as the markets prove increasingly unpredictable, more companies will likely confront rough waters and tough decisions in pursuit of profitability.

⚙️ Shifting Gears

Three months after scrapping its long-awaited smart bike, Zwift is planning to peddle content.

For context: In May, the virtual cycling platform announced it was shelving its hardware efforts, laying off department staff to refocus on software.

What’s happening: As the title sponsor of the Tour de France Femmes, Zwift sees the potential for an “integrated experience” merging real-world and digital cycling.

In an interview, CEO Eric Min spoke to activating content and engagement around IRL events.

“Zwift is something you do indoors. But our vision is that Zwift is cycling. It doesn’t matter whether it’s indoors and outdoors. I think that the two worlds will start bleeding into one another.”

In the race. While Zwift remains focused on software, Min acknowledged the potential for AR/VR experiences on the platform. As the fitness metaverse takes shape, pitting at-home riders up against the pros—in near real-time—could transform cycling.

Femme forward. Like in many sports, women’s cycling has historically been underserved. Now, with viewership on the rise across the board, there’s an opportunity to break down the disparity.

With three years left anchoring the Femmes Tour, developing immersive and accessible content could be a gateway for more female cyclists, who currently make up less than 20% of riders on Zwift.

Punchline: Zwift is doubling down on product innovation — one that aims to make cycling a hybrid experience for more people.

👉 Question of the Week

What fringe health/fitness practice will become normal over the next 3–5 years? Share your response here.

📰 News & Notes

NFL Combine inks NOBULL as training partner.
Gallup: Employees are more stressed than ever.
Athletic Brewing teams with IRONMAN for nonalcoholic IPA.
Amazon Care adds mental health services, teams with Ginger.
Plant-based franchise Veggie Grill launches delivery-only brand.
Fitt Jobs: Openings with the health & fitness industry’s top companies.
Startup Q&A: Enara Health CEO Rami Bailony on data-driven weight loss.
TikTok parent ByteDance buys hospital chain. [Re-read: Big Tech x Healthcare

💰 Money Moves

Digital fitness company Beachbody secured a $50M debt facility from Blue Torch Capital.
Interaxon, maker of brain health and meditation wearable Muse, raised $9.5M in Series C funding.
Wondermind, a mental health-focused media platform co-founded by Selena Gomez, raised $5M in pre-seed funding led by Serena Ventures.
Plant-based nutrition brand Happy Viking, founded by tennis icon Venus Williams, pulled in $2M from Serena Williams, Kevin Durant’s 35V, Peloton’s Robin Arzón, and others.
Boulevard, a booking platform for salons and self-care businesses, landed $70M in a Series C round led by Point72 Private Investments.
Healthy snack company Eat the Change raised $14.5M and will enter the functional RTD tea market.
Positive Food Co., a ready-to-eat meal company offered through Whole Foods, grabbed $7M in a funding round.
Next in Natural, a venture studio investing in sustainable CPG brands, acquired Lavva, a plant-based yogurt maker.
DTC Alzheimer’s care platform Craniometrix secured $6M in a seed round led by Quiet Capital.
LUCID, a music-as-medicine startup treating Alzheimer’s, closed $3M in a seed round led by Amplify Capital.
More from Fitt Insider: Sound On
Singapore-based oat milk maker OATSIDE raised $65.6M in a Series A round co-led by Temasek Holdings and GGV Capital.
Naborforce, an eldercare platform helping seniors age in place, closed $9M in Series A round led by Translink Capital.

Today’s newsletter was brought to you by Anthony Vennare, Joe Vennare, and Ryan Deer.