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15 Feb 2024
Xponential offloads Stride, its running-based boutique concept to focus on higher-growth markets
BY
Liz Terry
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Xponential Fitness has offloaded the Stride brand
photo: Xponential Fitness/Josh Honore
Xponential has passed ownership of Stride Fitness – the running brand it bought in January 2019 – to Shaun Grove, president of Rumble Boxing, with no payment changing hands. The company will trade as Stride Fitness Franchising Inc going forward, with Xponential providing handover support.
Stride was founded in 2017 by Katie Ownbey and Misa Dugally and only had one location in Pasadena at the time to joined the Xponential portfolio. It currently has 12 sites open with a focus on walk, jog run, HIIT and strength workouts.
"We're pleased to transition the Stride brand to an operator with almost a decade of experience owning and operating franchises, prior to joining Xponential," said CEO, Anthony Geisler."After considering the potential alternatives, we concluded this transaction was the best option for Xponential and the Stride brand."
As of 31 December 2023, Stride locations represented less than 1 per cent of Xponential’s portfolio and Geisler says the divestiture is not expected to materially impact the company's revenues in 2024.
Speaking to HCM in an exclusive interview towards the end of 2023, Geisler, said the company's portfolio was constantly under review to ensure it was optimising investment.
"The whole idea of a portfolio of brands is that things ebb and flow," he said... "This is the beauty of the portfolio play: we’re able to go in, buy brands and see which work very well and which don’t. We then have the ability to divest the brands that don’t work to our standard, but which may work to somebody else’s."
"We don’t have a strict timeline on how quickly a brand needs to perform," he said. "It isn’t a time bomb. But we do take a holistic look at each business: how we see the brand functioning in the US, internationally and online; the leadership and how we’ve gelled with the team; how much time and capital we’re putting into it."
Geisler hinted that Stride could be in play, saying "We continue to work on our less mainstream modalities such as dancing, rowing and running. Row House, for example, has almost 100 open studios. That’s exciting in the fitness and franchise worlds – a lot of people don’t make it to 100 open units – but then there’s a rest-of-franchise-world standard and there’s an Xponential standard. If we don’t see a path to, say, 500 open studios for each of our brands, we ask ourselves if there’s a better use of our time and our capital."
Immediately after talking to HCM, Xpotential did a deal with digital dance brand Kinrgy for the opening of brick and mortar stores, leaving Row House as the only one of the three brands namechecked to not yet get an overhaul, suggesting there may be news at some stage about changes there.
"We’re always evaluating our portfolio as a whole to ensure we have the optimal mix of brands," said Geisler. "Those brands may change over time, depending on factors such as consumer preferences, how each brand is performing and our overall strategy; as a public company, we have a duty to maximise value for shareholders and invest our time and capital wisely, while also remaining committed to our franchisees and providing them with the support they need to succeed."
Geisler told HCM the company would be unlikely to shut down a brand, saying: "Each has an IP, a customer base and studios that produce royalties. You wouldn’t just shut that down...
"We’d obviously make sure whoever we sold the brand to would step into our shoes and adequately support the franchisees," he said. "And with the value we place on strong performers and motivated entrepreneurs, if we were to make a change to our portfolio, we would look for opportunities to keep those high performers within the Xponential family."
Xponential will replace Grove as president of Rumble – he has agreed to remain in post until a successor is found.
To read more about Anthony Geisler's thinking on the development of Xponential Fitness, click click here.
To sign up for a free digital subscription to HCM, click here.
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