fitness-equipment-industry-weekly-news-w40Fitness Equipment Industry Weekly News
1. Nautilus, Inc. Receives Stock Delisting Warning from NYSE
On September 21, Nautilus, Inc. received a notification from the New York Stock Exchange (NYSE) indicating that the company no longer meets the NYSE's listing requirements. This non-compliance was attributed to Nautilus' average closing stock price falling below $1.00 per share for a continuous 30-trading-day period.
However, it's important to note that this notice from NYSE did not immediately result in the delisting of Nautilus' common stock.
Nautilus has indicated its intention to address this deficiency by responding to the NYSE within ten business days of receiving the notice, as per NYSE regulations. The NYSE provides a six-month period following the notice for Nautilus to regain compliance with the minimum share price requirement. To achieve compliance during this grace period, Nautilus must maintain a closing share price of at least $1.00 on the last trading day of any calendar month within the six-month period and maintain an average closing share price of at least $1.00 over the 30 trading days leading up to the end of that month.
As of the most recent trading session, Nautilus' shares closed at $0.70 per share. The stock's 52-week trading range has been between $0.67 and $2.17.
Notable brands under Nautilus, Inc. include Bowflex, Nautilus, Schwinn, and JRNY, which is the company's digital fitness platform.
2. Philips Licenses Deerma to Enter China's Home Fitness Equipment Market
In an effort to expand its presence in the Chinese home-use fitness equipment market, Deerma (301332.SZ), a publicly listed Chinese company, has taken a strategic move by introducing fitness-related products under the Philips brand. The company announced that its wholly-owned subsidiary, Shanghai Water Health Technology Co., Ltd., along with related parties, has signed a supplementary trademark license agreement with Philips NV, commonly known as "Philips."
Currently, Deerma team is actively exploring potential suppliers for fitness equipment development and establishing a supply chain advantage for future years' sales.
Under this agreement, Philips has granted the rights to use the PHILIPS trademark in the Greater China region for the development of health equipment-related products. This includes six categories of consumer exercise equipment, such as treadmills, stationary bikes, rowing machines, dumbbells with tracking functionality, smart fitness mirrors with intelligent body analysis and exercise programs, and software applications (apps) for controlling these products through smartphones or other smart devices.
The license agreement has a term of four years, effective from January 1, 2024, to December 31, 2027. The license fee is calculated as 3% of the net turnover from the sales of fitness equipment, with minimum guaranteed license fees ranging from €200,000 to €1.2 million annually from 2024 to 2027.
Additionally, if fitness equipment sales meet or exceed specific criteria, including achieving a monthly average net turnover of €1.5 million between January 1, 2024, and June 30, 2027, and receiving an average rating of ≥4.0 on the Google Play Store or Apple App Store for related apps by June 30, 2027, the product category will formally be included in Philips' trademark license agreement starting from January 1, 2028. In this case, the minimum guaranteed license fees will increase by €1.2 million annually.
Deerma sees this licensing agreement as a favorable opportunity to diversify its product portfolio, strengthen its industry position, and enhance its overall competitiveness. The company, founded in 2011, is an innovative appliance brand that focuses on various product categories, including environmental humidification, vacuum cleaning, small household appliances, and kitchen appliances.
On the other hand, Philips is a well-known Dutch multinational company specializing in health technology, offering a wide range of products and solutions, including medical devices and consumer electronics.
3. Lululemon Forges Strategic Partnerships with Peloton and Xponential Fitness while Stopping Selling its Own Mirror products.
Lululemon has made significant moves in the fitness industry by entering into two pivotal partnerships. Firstly, the company has teamed up with Peloton to offer exclusive digital fitness content through Lululemon's exercise app, Lululemon Studio. In return, Lululemon becomes Peloton's primary provider of athletic apparel. This partnership has resulted in a notable increase in Peloton's stock price.
Secondly, Lululemon has confirmed its ongoing retail partnership with Xponential Fitness, allowing Lululemon loyalty members to access on-demand and live-streamed fitness content from Xponential Fitness brands at discounted rates. This collaboration continues despite Lululemon's strategic decision to move away from providing all partner content on Lululemon Studio after October 31, 2023.
Lululemon also mentioned that it’ll stop selling the Mirror by the end of this year.
4. Peloton Names New Chief Product Officer as Co-Founder Transitions to Advisory Role
Peloton has appointed Nick Caldwell as its Chief Product Officer, effective November 1, 2023, signaling a strategic move for the fitness technology company. Nick Caldwell, a seasoned veteran with over two decades of global leadership experience in Silicon Valley, brings with him a strong track record of developing and scaling products and services that resonate with customers, drive business growth, and create a significant impact.
In recognition of Tom Cortese's invaluable contributions as a co-founder and Chief Product Officer, Peloton's CEO, John Foley, expressed deep gratitude for his tireless dedication over the past 12 years. He emphasized that Peloton's remarkable journey would not have been possible without Cortese's involvement. Cortese has played a pivotal role in propelling Peloton into new frontiers of fitness and innovation.
Starting from November 1, 2023, Tom Cortese will transition into an advisory role within the company while continuing to provide support for Peloton's vision and growth trajectory. Cortese expressed his eagerness for fresh opportunities and perspectives after dedicating himself to Peloton for over a decade. He also conveyed his excitement about witnessing and contributing to the next phase of Peloton's evolution, emphasizing the pride he feels for the accomplishments achieved together with the company.
This strategic leadership transition reflects Peloton's commitment to further enhancing its products, services, and subscriber base, both online and through its connected fitness hardware. It marks a new chapter in the company's journey of growth and innovation.
5. PureGym Completes Historic £805 Million Refinancing Deal, Expanding Its Reach and Confidence in the Fitness Sector
PureGym's holding company, Pinnacle Bidco, has successfully completed an £805 million refinancing deal, which is being hailed as one of the largest in the fitness sector's history. The swift uptake of the offering indicates strong investor interest and confidence in PureGym's business performance and strategy.
Humphrey Cobbold, CEO of PureGym, expressed his gratitude to the team for their efforts in restoring business performance amid the challenges posed by the pandemic. He emphasized that this refinancing provides PureGym with a competitive advantage over its rivals and demonstrates confidence in their affordable and flexible fitness proposition.
The refinancing includes two tranches of senior secured notes, totaling €380 million and £475 million, both maturing in 2028. The proceeds, along with existing cash reserves, will be used to redeem existing loan notes and pay accrued interest and redemption premiums. Pinnacle Bidco has also secured an increased senior credit facility of £175.5 million from a syndicate of banks, further strengthening its financial position.
While the interest rates on the refinanced debt are higher than before, Cobbold believes that PureGym's scale and cash flow can comfortably manage the increased interest costs. He sees this refinancing as an opportunity for PureGym to continue its expansion and investment plans, both within the UK and internationally, positioning the company as a global player in the fitness market.
6. SFIA Study Reveals Sustained Interest in Pandemic-Inspired Fitness Routines Among American
A recent study by the Sports & Fitness Industry Association (SFIA) has unveiled that Americans are continuing to embrace fitness activities they adopted during the pandemic. The SFIA's "2023 Tracking The Fitness Movement Report" highlights a significant increase of 5.3 percent, equivalent to 10.4 million individuals, in fitness participation since 2017. In 2022, total fitness participants reached a record high of 205.8 million, representing 67.4 percent of the population, surpassing rates seen in 2019 and 2021.
The report indicates that many Americans have stuck with the fitness routines they picked up during the lockdowns, such as walking for fitness. Additionally, there has been a resurgence in a wider variety of workout activities. Running and walking, for instance, experienced a boost, with 155.5 million people engaging in these activities in 2022, exceeding the 154.7 million participants in 2020.
The health club sector witnessed a positive trend as club workouts using equipment like stationary bikes, ellipticals, and stair-climbing machines rebounded from pandemic-related declines in 2022. However, the SFIA report did not identify a dominant "hot trend" among the Top 15 aerobic fitness activities.
In terms of specific activities, the study found that Cardio Kickboxing (+8.5 percent), Pilates Training (+5.8 percent), and Group Stationary Cycling (+5.5 percent) demonstrated the highest one-year participation growth rates.
Tom Cove, President and CEO of the SFIA, expressed optimism about the health club industry's potential for future growth. He believes that health clubs offer diverse fitness experiences, innovative concepts, social connections, and high-quality fitness experiences, making them well-positioned for continued success.
The SFIA report provides a comprehensive analysis of participation rates, cross-activity trends, age demographics, preferences for different activities, and insights into home versus club fitness preferences, offering valuable insights into the evolving fitness landscape in the United States.
7. Whoop Collaborates with OpenAI to Launch Intelligent Fitness Coach Powered by ChatGPT"
Fitness wearable specialist Whoop has joined forces with OpenAI to introduce an innovative coaching application named 'Whoop Coach.' This app leverages ChatGPT generative artificial intelligence (AI) technology, merging Whoop's proprietary algorithms with ChatGPT's capabilities to analyze individual fitness objectives, biometric data, and the latest sports science. It then provides personalized and conversational responses to health and fitness queries within seconds.
Whoop Coach is equipped to create customized training plans, recommend routes, suggest recipes, and provide insights into an individual's fitness journey. It can also offer natural language explanations for questions like "why am I feeling so tired?" or "why is this specific training important?"
Will Ahmed, the founder and CEO of Whoop, emphasized the practicality of Whoop Coach, stating that it fulfills the promises of AI and offers on-demand, personalized health and fitness coaching. This innovation represents a significant advancement in Whoop's product range, introducing a new level of functionality.
Brad Lightcap, Chief Operating Officer at OpenAI, recognized the potential of integrating AI into the health and personal performance sector, underscoring the transformative impact of Whoop Coach on unlocking human performance.
In parallel, OpenAI has enhanced ChatGPT by adding voice and image analysis capabilities and enabling the AI to browse the entire internet for generating responses to user queries through integration with Microsoft's Bing search engine. This extends ChatGPT's information access beyond data published prior to September 2021.
For Whoop, the incorporation of generative AI technology, coupled with its focus on sports science, sets it apart in the competitive fitness wearable market. Whoop Coach aims to not only collect data but also make sense of it, providing users with valuable insights to help them achieve their fitness goals.
OpenAI's advancements, particularly ChatGPT's internet access capabilities, hold great promise for the sports industry. It opens doors for real-time, up-to-date information integration into backend operations and digital channels, enhancing decision-making and providing a competitive edge.
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Author:
The founder of FITQS/FQC
The columnist of magzine <China Fitness Equipment>
20 years in fitness/sporting equipment OEM/ODM technical, quality control and sourcing management.