Xponential Fitness responds to critical report

July 8, 2023

Xponential Fitness, the largest global franchisor of boutique fitness brands, has responded firmly to critical report on its performance by financial services blogger Fuzzy Panda Research which claimed that many of its "brands and franchisees are struggling".

With the report having made unfavourable claims about Xponential Fitness Chief Executive Anthony Geisler and the business’s current trading position, shares in the New York Stock Exchange listed company dropped 42% after the release of the report last week - although they have since started to recover.

In response, Xponential Fitness’ Directors have called the report “misleading” and “inaccurate”, backed by positive statements from other analysts, such as Raymond James - who said the response of the market was “overdone”.

Speaking to media immediately after the publication of the report, Mark Grabowski, Chair of the board and founder of Snapdragon Capital Partners - the company’s largest investor - advised “as an investor in high-integrity management teams and high-performing businesses, I’ve known and worked closely with Anthony Geisler, CEO of Xponential, since investing in Club Pilates at my prior firm. I couldn’t speak more highly of his passion, commitment to excellence and professionalism.

“I’m confident in the strength of Xponential’s business and the company’s continued execution and creation of long-term shareholder value.”

Xponential Fitness - whose brands include BFT, Rumble, StretchLab, Club Pilates, CycleBar, Pure Barre, Row House, YogaSix, AKT and STRIDE Fitness - also published detailed statements about its financial position, rebutting the Fuzzy Panda report, including that its first quarter 2023 average unit volume was US$542,000. The details showed an expected 25-30% operating margin and 40% cash-on-cash return and that the data set of almost 2,000 studios - open continuously for 13 months, or longer as of 31^st March 2023 - yielded same store sales of 20%.

The company said it’s in compliance with all of its debt covenants and is levered at 2.9 times net debt, confirming that 74% of its revenues are recurring.

In support of Geisler, who Fuzzy Panda accused of selling off his equity, Xponential Fitness confirmed he owns 8.2 million shares in the business - a larger shareholding that the company’s top five outside institutional investors combined.

The company had previously reported US$245 million in revenue in 2022 - a 58% increase on the previous year - during which it saw 511 new studio openings across its total franchised estate around the world and the sale of 1,026 franchise licenses.

The company has also precited that its profits will more than double in 2024.

In its report, Fuzzy Panda suggested Xponential Fitness as an "abusive franchisor that is a house of cards” adding that “the founder and CEO of Xponential Fitness (XPOF), Anthony Geisler, has a long history of misleading investors and business partners," claimed the short-selling firm. "XPOF is (a) boutique gym franchisor with 10 different boutique fitness brands. We discovered XPOF is hiding the fact that many of their brands and franchisees are struggling."

It also said it had evidence that eight out of 10 Xponential brands are losing money, calling the business “an abusive franchisor that is a house of cards.”

It also pointed to claims by the company that it has “never closed” a location, advising that 30 have been permanently closed.

The last year has been a difficult one for global fitness franchises with F45 experiencing a range of challenges and UFC Gyms seeing clubs close in Singapore and its Australian master franchisor enter administration.

Click here to view Fuzzy Panda Research's original report,

Images: Xponential Fitness, whose brands include Club Pilates, has strongly refuted allegations made by Fuzzy Panda Credit: Xponential Fitness.

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