F45's gyms to remain open despite cost-cutting, slimmer management

F45 Training has about 40 franchises in Auckland and 81 in New Zealand. Photo / NZME

F45 Training's gyms will remain open despite moves to slim down the fast-growing 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 - 45 per cent of its work force - would go and that the Australian co-founder and "serial entrepreneur" Adam Gilchrist would step down as CEO.

The company has nine New Zealand studios.

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 for the company said.

"F45 remains committed to supporting the successes of our franchisees," she said in an email to the 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 since then have taken a bath, with the stock trading today 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.

"This transition will allow his successor to establish and execute new opportunities amid changing macroeconomic and business conditions," the company said.

Richard Grellman, F45's lead independent director, said that amid ongoing macroeconomic uncertainty, the company had started a review of its strategic and financial priorities.

As a result of this review, the company was realigning its corporate operations around an updated growth outlook that prioritises profitability and cash flow generation, he said.

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.

"We are taking the necessary steps to right-size our business in light of shifting macroeconomic and business conditions," said chief financial officer Chris Payne.

"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 long-term, 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).

The company's website says F45 Training is a global fitness community specialising in innovative, high-intensity group workouts that are fast, fun, and results-driven.

The "F" stands for functional training. The company claims that gym goers can burn up to 750 calories per 45-minute session.