Xponential Fitness, the most prominent boutique fitness franchisor in the United States, marked a significant milestone on Friday as it began trading on the New York Stock Exchange. The Irvine, California-based company, which owns a diverse portfolio of nine fitness brands, including Rumble Boxing, Club Pilates, and StretchLab, set its initial public offering price at $12 per share, slightly below the anticipated range of $14 to $16. Through this IPO, Xponential Fitness aims to raise $120 million.
Founded by Anthony Geisler, the former CEO of LA Boxing, Xponential Fitness has experienced remarkable growth since its inception in 2017. Geisler’s vision for the company began with acquiring Club Pilates, a small collection of boutique Reformer Pilates studios, in 2015. Recognizing the untapped potential in the boutique fitness market, Geisler transformed Club Pilates into a thriving franchise with over 900 licensed locations. This success laid the foundation for Xponential Fitness, which now boasts more than 1,750 studios across its nine brands.
The COVID-19 pandemic presented significant challenges for the fitness industry, and Xponential Fitness was not immune to its effects. 2020 the company recorded a 21.2% decline in system-wide sales, dropping to $422.1 million from $560.4 million the previous year. Total revenue also fell by 17.4% to $106.6 million, primarily due to a decrease in new studio openings and a loss in merchandising revenue. Despite these setbacks, Xponential Fitness adapted to the changing landscape, offering a combination of in-studio and streaming workouts that allowed the company to serve more than 850,000 customers during the height of the pandemic.
While the pandemic forced the temporary closure of health clubs, gyms, and studios across the country, resulting in a staggering $20.4 billion loss for the U.S. fitness club industry in 2020, experts believe the sector is poised for a comeback. Simeon Siegel, managing director at BMO Capital Markets, notes that the unique energy and social aspect of in-person fitness experiences will continue to attract consumers. “There’s a reason that when the Peloton Studio was open, people would go there,” Siegel explains. “I think what makes boutique fitness so special is the in-person energy, the ability to leave your house, the ability to go and see similar people.”
Xponential Fitness differentiates itself through its innovative XPASS, a fitness pass that grants members access to classes across all nine brands. This approach caters to consumers who enjoy variety in their fitness routines and helps to retain them within the Xponential ecosystem. CFO John Meloun believes that this strategy, combined with the company’s diverse offerings, sets Xponential Fitness apart from competitors like Peloton and Orangetheory.
As the boutique fitness sector prepares for a post-pandemic recovery, Xponential Fitness is well-positioned to capitalize on the industry’s projected growth. An independent analysis by research firm Frost & Sullivan suggests that the U.S. boutique fitness market, valued at $21.1 billion in 2019, is expected to recover to $22.1 billion by 2022 and grow to $26.2 billion by 2025. With its proven business model and strong consumer demand, Xponential Fitness is poised to play a significant role in the industry’s resurgence.
“Our consumers came right back to the studio [post-Covid],” Meloun states, highlighting the company’s resilience and the enduring appeal of boutique fitness. “Our system-wide sales exceed pre-Covid levels. That tells us that boutique fitness is strong and that the consumers that use it are returning to the gym.”
As Xponential Fitness embarks on this new chapter as a publicly traded company, it remains focused on its mission to provide consumers with a diverse range of high-quality boutique fitness experiences. With its strategic approach to growth and ability to adapt to changing market conditions, Xponential Fitness is well-equipped to navigate the challenges and opportunities in the dynamic world of boutique fitness.
