F45 gyms open despite cutbacks
F45 Training’s gyms will remain open despite moves to slim down the fastgrowing Us-based franchise operation, a company spokesperson said.
The company, once part-owned by actor Mark Wahlberg, said it would align itself more closely with macroeconomic conditions and current business trends.
The Austin, Texas-based F45 said 110 jobs would go and that the Australian cofounder and “serial entrepreneur” Adam Gilchrist would also step down as chief executive.
The company has 81 New Zealand franchises, about 40 of them in Auckland.
Globally there are more than 4000 franchise owners and 1866 studios in 69 countries.
“The announcement does not impact F45’s strategy or the F45 gyms that are open,” the spokesperson said.
“F45 remains committed to supporting the successes of our franchisees,” she said in an email to the Weekend Herald.
The company listed with great fanfare on the New York Stock Exchange in July last year, opening at US$17 ($27) a share.
Investors have taken a bath since then, with the stock trading yesterday at US$1.85, down from US$4 before this week’s announcement.
When F45 debuted, media reports said Wahlberg had sold more than 20 million shares for US$16 each.
Gilchrist, with 20 years’ experience in franchising, marketing and product development, co-founded the company and has served as co-chief executive officer since 2014 and a member of the company’s board of directors since 2017.
He is stepping down as president, chief executive and chairman, but will remain on the board.
Richard Grellman, F45’s lead independent director, said the company would prioritise profitability and cashflow generation.
The company now expects its selling, general and administrative expenses to be about US$15M to US$20M per quarter — about half the expenses incurred during the first quarter of this year.
Chief financial officer Chris Payne said, “we are taking the necessary steps to right-size our business in light of shifting macroeconomic and business conditions.
“While we expect growth to continue, market dynamics are having a greater than expected impact on the ability of franchisees to obtain capital to develop new F45 locations.
“In addition, recent share price performance has made it challenging for franchisees to utilise financing facilities announced earlier this year,” he said.
“While reducing corporate headcount was an incredibly difficult decision, acting proactively to realign our resources is an important step to enable the company to remain on track for . . . sustainable success.”
F45 has taken a big axe to its financial forecasts. It now expects the full-year number of franchise sales to be between 350 and 450, compared to prior guidance of 1500, and initial studio openings of 350-450, compared to the prior guidance of 1000.
It expects full-year earnings before interest, tax, depreciation and amortisation of between US$25M and US$30M (from US$90M to US$100M).