FITNESS NEWS Europe 1

Technogym hits Milan stock market

The Milan stock exchange literally rolled out the yellow carpet for Techno-gym as the Italian fitness

equipment group’s shares started trading today, after an offer to institutional inves-tors that was nearly four times oversubscribed and values the group at €650 million.

The offering related to 50 million shares or a stake of 25% divested by Salhouse Holding, an investment vehi-cle of Arle Capital Partners. It held 40% of Technogym, while the remaining 60% are in the hands of the company’s chief executive, Nerio Alessandri, and his brother Pierluigi.

The stock market launch was a colourful affair, at-tended by captains of industry as well as athletes and other famous Italians. Alessandri emphasised that Technogym would continue to focus on long-term development and investment.

The launch price was set at €3.25, which is toward the lower end of the range of €3 to €3.75 set at the start of the road show in London last month. Technogym ended its first day of trading at €3.62, up by more than 11%.

The initial public offering (IPO) includes a green shoe option for the sale of another 7.5 million shares held by Arle, amounting to 3.75% in Technogym. The investment firm would thus sell 28.75% and remain a minority share-holder.

The price set for the IPO means that Arle cashed in €162.5 million for the 25% stake and could get nearly €24.4 million more with the greenshoe option.

Technogym said that the in-stitutional buyers were influ-ential firms from Italy, the U.K., other European countries and

the U.S. Alessandri added today that the investors were picked on the back of their long-term interest.

There had been talk of a po-tential IPO since last year but the stock market launch was for-

mally set in motion in February, when Technogym filed a tempo-rary request for admission to the Milan stock exchange.

Technogym said that the IPO was meant to provide an exit for Arle, while supporting the company’s managerial disci-pline and potentially to finance acquisitions.

The IPO puts a value on the achievements of Alessandri, who started building fitness equipment in a garage in 1983 and put Technogym at the fore-front of what he calls The Well-ness Economy.

Technogym reported a sales increase of 10% to €511.8 million last year, with fitness clubs accounting for 56.8% of the turnover. Operating profit (EBITDA) soared by nearly 40% to €86.7 million.

About 62.7% of the group’s turnover came from Europe, including a share of 8.8% in Italy. Asia Pacific made up about 13.5% of sales, another 9.7% came from the the Mid-dle East, India and Africa, and 3.4% from Latin America.

That left just 10.6% for North America, but Technogym denied Italian press reports that an acquisition was in the works in the U.S. market.

Meagre organic sales growth for Life Fitness

Sales in Brunswick Cor-poration’s fitness seg-ment were nearly flat in the first quarter, exclud-

ing the impact of currency exchange rates and the acqui-sitions of Cybex International and SciFit Systems.

The Life Fitness division’s sales jumped by 18% to €218.3 million for the quar-ter, with an increase of 19% in constant currencies. But the acquisitions accounted for a sales increase of 18%, leaving

an underlying rise of 1% for Life Fitness.

Cybex International, which reaped sales of about $169 million last year, was bought by the Brunswick group for $195 million in January, while the acquisition of SciFit, which focuses on active age-ing products, was agreed in July last year.

Despite the weak compara-ble sales increase in the quar-ter, Brunswick’s guidance for the fitness division remains

unchanged, and the company is upbeat about the prospects of the combination.

“We’re making excellent progress integrating Cybex into the fitness segment and are already starting to see the benefits of combining these commercial fitness equipment leaders,” said Mark Schwabero, Brunswick’s chairman and chief executive, in a conference call with analysts.

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CONTENTS Technogym hits Milan stock market ............................. p1Meagre organic growth for Life Fitness ...................p1-2Nordic fitness equipment distribution tie-up ...........p2Sluggish European sales for Precor ...............................p3énergie launches crowdfunding ................. p4World Gym moves into Europe ............................. p4MACFit rapidly builds up Turkish chain ................ p5-6Puma leaps into women’s fitness ..............................p7

Other newsCMG Sports Club (p6), Garmin (p3), Nokia (p3), SATS (p6), Snap Fitness (p6), Under Armour (p3), Withings (p3)

Continued on page 2....

May 3, 2016Issue N°6

Fitness News Europe is published by Zelus (France)

info@fitnessnewseurope.comEditor: Barbara Smit

news@fitnessnewseurope.com@ All rights reserved.

The information published in this newsletter cannot be copied or distributed electronically without the publisher’s written permission.

Nerio Alessandri. Photo: Technogym

2 FITNESS NEWS Europe

Top Gear

Disclaimer: Content in this publication and on the related website is for your general information and use. It does not constitute the offering of investment advice (either actual or implied) and should not be relied upon in making (or not making) any decision. We use all reasonable endeavors to ensure the accuracy of the content but do not guarantee or warrant the accuracy, completeness or timeliness of any content whether from a third party or otherwise. Views expressed by third parties are their own.

Fitness Brands’ team Photo: Fitness Brands

(*) in constant currencies Source: Brunswick Corp. (**) excluding restructuring and integration charges

The Life Fitness division’s sales for the quarter jumped by 14% in Europe, which ac-counted for 18% of the divi-sion’s sales and moved up by 18% in constant currencies. Other international markets accounted for 26% of the divi-sion’s turnover and delivered a sales rise of 11%, up by 13% in constant currencies.

Brunswick said that inter-national sales made up 44% of the fitness segment’s turn-over, after an increase of 12% in reported terms and 15% in constant currencies, but the underlying sales increase was “modest” without acqui-sitions.

The buys fueled a 22% in-crease in the fitness segment’s U.S. turnover, while sales for continuing operations de-clined “slightly”. The company saw a rise in U.S. sales to local

and federal government en-tities, and a slight increase in sales to health clubs, but its business was affected by the weakness of consumer sales.

Apart from Life Fitness, Cy-bex and SciFit, the division includes Hammer Strength and In Movement, a brand launched by Brunswick for fit-ness in the workplace. Bruns-wick also transferred its bil-liards business to its fitness division in March 2015, after the sale of its bowling activi-ties.

The group said after the Cy-bex acquisition that sales from its fitness segment should approach $1 billion this year. This compares with $794.6 million for the segment and pro forma sales of $964 mil-lion with Cybex last year.

With the acquisitions, Bruns-wick is targeting a sales hike in the mid-to-twenty percentage

rate for the fitness division for the full year. But without them, sales should rise at a high-sin-gle-digit rate, said Schwabero.

After restructuring and in-tegration charges of $3.8 mil-lion, the division’s operating profit declined by about 22% to $20.1 million for the quar-ter, amounting to an operating margin of 9.2%. The adjusted operating margin reached 10.9%, about 3.0 percentage points lower than the same quarter last year.

Earnings were inflated by cost reductions and savings from sourcing, along with favourable warranty adjust-ments, but they were reduced by unfavourable changes in the customer channel mix, $1.6 million in purchase ac-counting adjustments, and $4 million in restructuring and acquisition costs. Bill Metzger, Brunswick’s chief financial of-ficer, said that the company is anticipating about $7 million to $10 million in restructuring costs for the full year.

As the company already announced in January, the Cy-bex acquisition should reduce the Life Fitness division’s ad-justed operating margin this year. The impact should be felt more strongly in the first half of the year “due to seasonal-ity of the Cybex business and limited benefits from the in-tegration savings,” Schwabero added.

Cybex structurally deliv-ered a lower margin than Life Fitness, because its operat-ing cost base is higher as a percentage of sales. However, Brunswick says that cost re-ductions should enable the en-larged fitness division to raise its operating margin back to the previous level for Life Fit-ness in 2018.

Life Fitness has yet to pro-vide details about the inte-gration plans. As previously reported, Jason Worthy has been appointed managing di-rector Cybex International. He is taking over from John Young, senior vice president of international sales and distribution at Cybex, who left the company earlier this month. The Cybex operations in Europe include an office in Coalville, in the U.K.

Brunswick said at the time of the Cybex deal that it would yield synergies of $23 mil-lion by 2018, with $7 million coming from manufacturing savings. Such savings were projected to contribute $10 million to synergies of $30 mil-lion by 2020.

The entire Brunswick group, which comprises boating and marine activities, raised its sales by 9% to $1,070.3 mil-lion for the quarter. The rise reached 10% in constant cur-rencies and 6% excluding both currency exchange rates and acquisitions.

...continued from page 1

Brunswick Corp. Fitness SegmentQ1, 2016 (%, $ million)

Q1 2015Change

%ChangeCN (*)

% of global

Sales 218.3 m 18% 19% 100%

U.S. 22% 22% 56%

Europe 14% 18% 18%

Rest of World 11% 13% 26%

Operating earnings (**)

23.9 m - 7.4%

Two leading Scandinavian fitness equipment distributors, Motion-skompaniet in Sweden and Gymline in Norway, have teamed up to form

Fitness Brands Nordic, with a joint turn-over of about 135 million Swedish crowns (€14.6 million) and plans to double their sales in three years.

Motionskompaniet and Gymline are both distributors of Life Fitness, Hammer Strength, Escape Fitness and Stages Cy-cling, while Gymline also sells TRX in Nor-way. They intend to add more partners in adjacent categories such as lockers and flooring, which would enable them to fully equip gyms in Sweden and Norway.

“The market is getting more Nor-dic, with more gym operators working across Nordic markets,” explained Per

Andersson, managing director at Fitness Brands Sweden. He said the two com-panies had already worked together on projects related to Life Fitness for many years and figured that their partner-ship could be even more efficient if they joined forces.

Andersson estimates that the two com-panies account for about 12% of the com-mercial fitness equipment market in the Nordics. Out of the joint turnover of SEK 135 million, Motionskompaniet brings in SEK 87 million (€9.4 million).

Fitness Brands is to keep both of its of-fices employing 37 people in Sweden and in Norway, and it intends to recruit more to support its expansion. Among other projects, it has started building up a team for home fitness equipment sales. The

group’s turnover is currently derived at 98% from commercial gear.

Fitness Brands Nordic, the holding com-pany above the Swedish and Norwegian offices, is established in Västerås, Swe-den, and owned jointly by Andersson and Trond Karlsen, managing director of Fit-ness Brands Norway.

Nordic fitness distribution tie-up

FITNESS NEWS Europe 3

Top Gear

Geek Briefs

Sluggish European sales for Precor T

he Finnish company that owns the Precor brand could revise its approach of the European market in the coming years, after a struc-

tural overhaul that gave it fresh impetus in the U.S. market.

The fitness division of the Amer Sports group saw its sales dip by 4% to €14.5 million in Europe, the Middle East and Africa for the three months until the end of March, with a decline of 2% in con-stant currencies.

This compares with sales increases of 29% to €12.1 million in Asia Pacific and 5% to €47.8 million in the Americas, af-ter Precor decided to adjust its distribu-tion in the U.S. market.

Jussi Siitonen, the Amer Sports group’s chief financial officer, said in a confer-ence call with analysts last week that its latest fitness equipment products and investments are most strongly aligned with the trends and demand in the U.S. market.

Amer managers pointed to the group’s acquisition of Queenax and its partner-ship with Mad Dogg Athletics in the in-door cycling category, as well as invest-ments in digitalization and the sales and distribution changes implemented at Precor for the U.S. market.

“We now have focused on re-igniting the growth in the United States, we put in place a lot of building blocks, we made the acquisitions and we did the sales force remodeling, which is now starting to show signs of working,” said Siitonen. “I think we can do the same in EMEA, but we need to sequence and prioritise,” he added.

The turnover of the Amer Sports group’s entire fitness division increased by 6% to €74.4 million for the quarter. Its operating profit before one-off items was off by €1.0 million to €0.3 million, which the company attributed to factory start-up costs for new products, along with investments in digital projects.

“Once we confirm that we can actu-ally get back to profitable growth, then we seek to accelerate even more,” said Siitonen, adding that the latest perfor-mance was encouraging and that he was upbeat about the prospects, given “all the initiatives we have up and com-ing.”

Amer Sports, which owns brands from Arc’teryx to Suunto, Salomon, Atomic, Wilson and many others, raised its sales by 10% to €635.5 million for the quarter, aided by an acquisition in the team sports business last year.

Organic growth was 6%, driven by double-digit sales increases in outdoor apparel and footwear.

The Finnish group’s EBIT margin gained 1.4 percentage point to reach 7.2% excluding items affecting compa-rability. Amer Sports ended the three months with net profit of €23.2 million, up from €17.2 million.

Amer Sports FitnessJan-March 2016

(million, %)

2016 Change ChangeCN (*)

Sales 74.4 + 6% +6%

EMEA 14.5 -4% -2%

Americas 47.8 +5% +4%

Asia Pacific 12.1 +29% +29%

UnderlyingEBIT (**)

0.3 m - 1.0 m -

Source: Amer Sports (*) currency-neutral (**) EBIT margin before items affecting comparability

n The fitness division at Garmin raised its sales by 9% to $142.4 million for the quarter, albeit with sharply reduced mar-gins. The Swiss-based company started shipping its Garmin Elevate wrist-based heart rate technology in the activity tracker and running categories, which more than made up for a decline in sales from multis-port products. The company also launched the Vívoactive HR and Vívofit 3, which boasts a battery life of one year. However, the gross margin for Garmin’s entire fitness division shrank by 12 percentage points to 51% and the operating margin fell by 14 percentage points to 12%, which Garmin attributed to continued investment in ad-vertising and research to support its long-term goals in this category. The Garmin group’s sales were up by 7% to $624 million for the quarter, as growth in fitness as well as in the outdoor, aviation and marine divisions more than made up for a decline in auto sales. The outdoor category was particularly buoyant, with a sales increase of 33% for the quarter. The group’s gross margin reached 54.5% while its operating margin landed at 16.6% and its net income amounted to $88.1 million, up from $66.8 million for the same quarter last year.

n Nokia wants to move into the fitness market with the acquisition of Withings, in a deal that values the French connec-ted health specialist at €170 million. The transaction is to be paid in cash and should close early in the third quarter, pending regulatory approvals. Withings sells activity trackers along with health-related products from weighing scales to thermometers and more. It has also built a digital health plat-form and operates in an ecosystem of more than 100 compatible apps. Withings is to become part of Nokia Technologies, the Finnish group’s advanced technology and licensing business. Nokia pulled out of the consumer device market when it sold its once pioneering mobile phone business to Microsoft in 2014, and it has since focused on networking gear and 5G technology. Withings could thus bring Nokia back to mobile devices, with a focus on wearables and the Internet of Things (IOT). Nokia Growth Partners, a fund manager entirely sponsored by Nokia, created a $350 million fund for IOT investments in February. With-ings was set up in 2008 by chairman Eric Carreel and chief executive Cedric Hutch-ings. It employs about 200 people in Paris, in Hong Kong and near Boston.

n Connected fitness generated sales of $18.5 million for Under Armour (UA) in the first quarter, more than twice the turnover in the same quarter last year, but the divi-sion’s operating loss widened from $15.0 million to $16.5 million. Connected fitness, which reaped sales of $53.4 million for UA last year, was built up with investments of $710 million to buy MapMyFitness, My-FitnessPal and Endomondo. Kevin Plank, UA’s chief executive, said that its fitness community has grown to more than 160 million registered users, with over 100,000 new users logging in every day. The quarter saw the launch of the UA Health Box (with a fitness tracking band, a heart-rate chest monitor and a weighing scale) and the Gemini 2 smart shoe. Sales derived from activity on UA’s connected health platform nearly reached the same level in the quarter as in all of 2015. Plank emphasized that the division remains in “investment mode” as UA works on consumer engagement and its “mathhouse”, which provides big data for the group. The group’s turnover jumped by 30.2% to $1,047.7 million for the quarter, up by 25.7% in North America and by 55.6% to $149.4 million in other markets. UA’s net income soared by 63% to $19.2 million.

4 FITNESS NEWS Europe

Gyms

Photo: World Gym

World Gym targets European market

World Gym international has embarked on a campaign tar-geting the opening of 200 franchises in Europe in the

next five years, which would nearly dou-ble the existing network.

The Californian group currently boasts 210 gyms and franchises, about half of them in the United States. World Gym clubs have opened in 22 countries but only nine of them are in Europe so far, eight in Russia and one in Germany. The group says that 40 gyms were added last year, including four in Russia.

World Gym International teamed up with Gentil Dossche to search for part-ners in Europe and attended FIBO in Cologne last month to spread the word. Dossche is already World Gym’s apparel licensee in Europe and distributor for Hoist Fitness commercial equipment in Germany, Austria and Switzerland.

Jim Teatum, in charge of international development and franchising at World Gym, explains that growing participa-tion and the inflow of investment in the European fitness market spell opportu-nity for the U.S. company.

“We have plenty of knowledge about franchising and management of fitness clubs, and World Gym is a brand that

also has recognition in Europe,” says Teatum, adding that the company has received enquiries from Eastern Europe, Scandinavia and other markets.

World Gym, which was established in Santa Monica four decades ago, appar-ently wants to team up with gym owners instead of master franchisees. Teatum says this strategy is dictated by the ap-proach of the Cammilleri family, which acquired World Gym from Planet Fitness seven years ago.

The brand, which is meant to stand for

“seriously fun” fitness, has been expand-ing in the last years across North Amer-ica as well as Asia, Australia and the Middle East. The second-largest market for World Gym is Taiwan, where it has 42 gyms.

The offer for World Gym clubs consists of a one-time investment of $25,000 for an opening, paired with a monthly roy-alty of $1,000, while conversions would come at a cost of $12,500 with a roy-alty of $500 per month for the first two years and $1,000 thereafter.

Separately, World Gym has been work-ing on the launch of a studio concept, RedCon, which is targeting Millennials. “They are looking for raw experiences and transparency, and above all for ca-maraderie and tribal belonging. Many mainstream clubs could offer that, but they don’t,” says Teatum.

The name stands for Red Line Condi-tioning and is described as a studio for high intensity interval and functional strength training, with a cardio com-ponent consisting of rowers and bikes. Teatum says that RedCon is meant to operate as a standalone unit or a “box within the box.”

The World Gym group is building a pi-lot standalone studio in Orange County this summer and it will launch the con-cept at IDEA World in Los Angeles in July. The target is to have 300 RedCon studios in three years, with an initial franchise fee of $35,000 and a monthly royalty amounting to 4% of gross revenue.

énergie Group has launched a crowdfunding cam-paign to raise £500,000 (€635,000) through an

offering on Crowdcube.Jan Spaticchia, chairman and

chief executive, says that the company has opted for crowd-funding to allow franchise holders and staff to take part in the group’s expansion. “We are a robust and scalable busi-ness that has been trading for 13 years, is profitable and cash generative with zero external net debt,” he said.

énergie is targeting 580 clubs and one million members by 2023, compared with 93 clubs and over 110,000 mem-bers that generated a turnover nearing £26 million (€33 m) in the last twelve months.

The group runs three fran-chise formats: énergie Fit-ness Club, énergie Fitness for Women and Fit4less, which offers membership starting at £14.99 per month.

While most of the group’s franchises are in the U.K., it has ten in the republic of Ireland and three in Latvia, and one Fit4less scheduled to open in July in Gdansk, Poland.

Spaticchia says that two more gyms are set to open in Latvia, and énergie is finalis-ing talks with its partners in the country to expand their master franchise to Lithunia and Estonia. The master franchise for Poland was at-tributed to two former Hol-mes Place employees, Julian Ward-Turner and Jonathan Pearson, who teamed up with an English franchisee to open the first Polish club. The next openings are likely to take place in Italy and Spain, where énergie is targeting the launch of pilot clubs in the next twelve months.

Spaticchia says that the offer-ing, which is running through-out May, amounts to 3.23% of the capital and values the com-

pany at £15 million. The funds are to be invested in market-ing, technology and a national training centre.

The largest current share-holder is Spaticchia with a stake of 32.2%. Other major shareholders are Martin Ash-ley, a former insurance un-derwriter, the Serrafina trust fund and Abbey International Finance.

At the same time, it turns out that Steve Philpott has returned to the company he established with Spaticchia in 2003. He went on to become managing director of David Lloyd Leisure and then DC Lei-sure, but he relinquished that job in January last year and was appointed to énergie’s board in April.

énergie Group’s announce-ment points to increased in-terest from investors in the fitness sector, with the ini-tial public offering (IPO) that launched The Gym Group on

the London stock exchange in November, and suggestions that Pure Gym and Bannatyne could hit the stock market later this year.

Another gym group that opted for crowdfunding was 1Rebel, which raised £3 mil-lion in December.

énergie prepared for a stock market launch four years ago, aiming to raise £4.5 million on the Alternative Investment Market (AIM) for smaller com-panies, but gave up due to mar-ket upheavals.

The plans around the current fundraising call for an exit be-tween 2018 and 2023.

énergie launches crowdfunding

The énergie team. Photo: énergie Group

FITNESS NEWS Europe 5

Gyms

MACFit in Ömür Plaza, Istanbul

MACFit rapidly builds up Turkish chain

Quick Readn Mars Sportif group: 120,000 members at 38 gyms (34 MACFit, 4 MAC company-run). Two more MACFits in July and August.

n Projecting 54 gyms end 2016 and about 70 end 2017.

n Roll-out supported by Turkish owners.

n Efficient low-cost concept with Turkish adjustments.

n First national campaigns this year, app with beacons and push messages end May.

MACFit is rapidly mov-ing ahead with plans to build up a chain of 70 low-cost gyms in

Turkey’s largest cities by the end of next year – and reshap-ing the country’s fitness mar-ket along the way.

The gym operator’s Turkish founders previously built up the country’s leading chain of cine-mas, which was sold to South Korean counterparts in April. But Mars Sportif, the group that runs MACFit, wasn’t part of the deal and is more likely to start searching for buyers around the end of next year, once it has ac-quired more size.

MACFit’s bright green concept started spreading less than four years ago, when Mars Sportif already had five more upmarket MAC clubs. The cheaper MACFit concept has since grown into a group of 34 gyms in seven Turk-ish cities (with two more open-ing this summer). Mars Sportif’s clubs have about 120,000 mem-bers in all, 15,000 at MAC and the remainder at the cheaper clubs.

Entirely unrelated to the McFit group in Germany, the Turkish MACFit has shaken up the market by offering monthly membership at 90 Turkish lira (€27.5) or less as an annual membership. MACFit esti-mates that about 70 to 75% of its members had never joined a gym before – adding to a mar-ket where gym membership rates reach less than 3% of the adult population.

“At the beginning many peo-ple thought that gyms at this price would have to be rubbish, but that changed entirely when the gyms opened,” said Peter Wright, chief executive of Mars Sportif, at his office in Istanbul earlier this year. “People are joining in large numbers, be-cause they can afford it, they love the vibe, it’s a very social atmosphere.”

Turkish ownersWhen Wright moved to Tur-

key, after top assignments at Virgin Active in South Africa and Body Masters in Saudi Ara-bia, Mars Sportif had five MAC clubs selling annual member-ships at a price unattainable for most Turks. There was little in between these slick facilities and basement gyms.

Back then, Mars Sportif was using the MACFit name for six cheaper clubs. But it was four years ago that the company properly defined its low-cost concept and started to roll out.

The format is inspired from the most efficient low-cost gyms in other countries, but with adjustments for the Turk-ish market. While registration occurs online, there are al-ways two sales people at the gym to lead potential mem-bers through the process. An-other touch meant to appeal to the social aspect of the Turk-ish market is GFX – gym floor classes held four times per day with four to ten people.

Among other investments, MACFit has built up its own academy, supported by Life Fitness, to train sufficient in-structors. It works with ten freelance personal trainers per club.

As Wright points out, the rapid expansion has been strongly aided by the group’s shareholders. Mars Sportif is owned by Actera Group, a pri-vate equity firm; Esas Hold-ing, which was established by members of the Sabanci family; and a holding company formed by the founders of Mars Spor-tif, Muzaffer Yildirim, Mend-eres Utku and his sister Nilgül. Mars Sportif ’s shareholding is

equally spread between this holding company and the two other investors.

The connection with the cin-emas has been most useful as it opened up access to real es-tate for the gyms. But Wright says that Mars Sportif ’s own-ers have been equally helpful in just picking up the phone to get things moving – in a coun-try where relationships are crucial.

At the same time, urban

Turkish youth picked up on the fitness trend. “Our timing has been fortuitous, because the Turkish population is young and digitally connected, and there has been a real aspira-tion towards getting fitter,” Wright explains. “We’ve given them the opportunity to jump on board with their friends and at an affordable price.”

The chief executive says that about 65% of the members are men with an average age of about 27 to 28 years, and most of them are from relatively low income groups. “I’m after the people who’re sitting in Mc Donald’s,” says Wright. “They can afford it, they have a right to exercise and make their lives better.”

Push messagingMost of the clubs haven’t

been opened long enough to compute a reliable retention rate, but that is another area of investment for MACFit. At the end of May it will launch an app working with beacons and push messaging to support the motivation of its members.

MACFit’s most direct rival is Jatomi Fitness, the Polish-based group that got started in 2007 with investment from Mike Balfour, founder of Fitness First. Jatomi identified Turkey as a market with strong growth potential and opened a dozen gyms, but it has apparently been struggling to compete with its cheaper and well-con-nected rival in Turkey.

“Jatomi was fairly aggres-sive when we started, for a

while they were two or three clubs ahead of us, signing leases we weren’t prepared to sign,” said Wright. While MACFit gyms cover an aver-age of 1,000 to 2,000 square meters, some of the Jatomi clubs are much larger and in settings that make the leases costly.

Jatomi’s business in Turkey has been affected by recur-rent management changes, the latest with the appointment in April of Trevor Brennan as chief executive of the entire group.

It’s not entirely unlikely that MACFit’s expansion will get an extra push if Jatomi de-cides to divest at least some of its Turkish gyms. Brennan said he had already travelled to Istanbul twice as part of his review of the group’s op-erations.

Meanwhile the Turkish mar-ket has grown to an estimated 1,600 gyms, and it has diversi-fied with a few smaller groups and striking standalone con-cepts.

Continued on page 6...

6 FITNESS NEWS Europe

Among them is Nuyu, an Istanbul stu-dio run by personal trainers with plenty of functional training gear on four small floors overlooking the Bosphorus. An-other is D-Gym, a spectacular club with plush facilities and annual membership fees of $2,250 – without access to the VIP lockers at an extra $300 per month.

Fitness has been spreading among Turkish women with support from Bfit, a franchise with scores of studios for wom-en-only circuit training. Women are also targeted by cheap municipal facilities that are part of community investments.

Yet all of this leaves plenty of space for MACFit to continue expanding its concept and Wright says that the current pace of openings could be sustained for some time.

The attitude of landlords has already changed markedly. “They realise the number of people we bring in and are pleased to have us as an anchor tenant,” says Wright. But he adds that the major challenge still “lies in securing the sites, so we’re working hard to streamline our

real estate process.”This fits with the “systems-driven” ap-

proach at Mars Sportif, which has come up with many standard procedures to open and run the clubs efficiently. Wright says that all of them are profitable.

While the focus for locations was pre-viously on malls, it has shifted to street and other locations. Wright says that big box retailers such as Tesco and Decathlon have been downsizing in Turkey, which opens up sub-leasing space for gyms.

The group’s health clubs are currently located in Istanbul, Ankara, Adana, Antalya, Izmir, Bursa and Izmit. The pri-ority for the time being is to blanket cover Istanbul, a sprawling city of 14 million people where MACFit estimates that there could be space for more than 50 gyms.

Its opening procedures involve set pre-sale marketing plans unfolding over three months, with the target to have 3,000 members at opening. Apart from flyers and billboards, this includes a form of flash mob marketing with six people walking around in boxes in su-

permarkets and suddenly jumping out to draw attention.

More broadly, MACFit aims to build awareness around fitness in Turkey, where there aren’t any sizeable trade or-ganisations to lead the way. Along with

its MACFit team of athletes, its blog and many other online activities, the operator is preparing to launch its first nationwide campaigns this year.

Gyms

MACFit Ömür Plaza, Istanbul

Gym Briefsn Snap Fitness has signed a development deal with MSG Life Limited to open 30 loc-ations across the U.K., starting with Bristol this month. The agreement was described as the franchise’s largest development deal. Snap Fitness has a master fran-chising agreement in place for the U.K. with TwentyTwoYards, which was finalised in November 2014 with the intention to open 250 franchises in four years. The agreement with MSG Life could help to move toward that target, which is still quite far away since there are ten Snap Fitness franchises in the U.K. so far and another four open-ing shortly. “With millions of prospective members in this area, this is a paramount move for our brand,” read a statement from Steele Smiley, chief development officer at Snap Fitness. Among the primary own-ers of MSG Life is Moonpal Grewal, who previously developed Domino’s Pizza in the U.K. as one of its largest franchisees. Snap Fitness has been expanding in several European markets in the last months, as previously reported. Among the latest moves, a master franchising agreement was sealed in September for the Nether-lands, Belgium and Luxembourg, with a target to have 85 gyms open in three years’ time, and the group’s master franchisee in Spain opened his first gym in Barcelona in September, targeting about six clubs this year and 100 in five years’ time. Established in 2003 by Peter Taunton, Snap Fitness boasts more than 2,000 clubs open or in development in 18 countries.

n CMG Sports Club, the leading gym operator in Paris, has opened what it describes as a full-fledged sports hub, with a premium gym and three studios. The One Saint-Lazare was built on 3,000 square meters in a former garage, making it the group’s largest. It includes the Boxing Club XVII (referring to the arrondissement where the center is located), developed in partner-ship with Brahim Asloum, an Olympic box-ing champion; the Cycle Club XVII, equipped with Les Mills Immersive; and CrossFit XVII, with Eleiko gear. CMG Sports Club, which already had 22 clubs with three different concepts in and around Paris, boasts that the new club is the first in Europe to have a freestyle area with synthetic grass. More than 120 weekly courses are to be held at the One, which also features the Detox Delight corner for juice, soups or even vegan dishes. The standard price for access to One clubs reaches €80 per month. The open-ing marks a return to expansion for CMG Sports Club, which has entirely revised its concepts in the last years, as previously re-ported. Franck Hédin, the company’s chief executive, is now targeting two openings per year to reach a network of 30 clubs in Paris. The French group has also started scouring the market to acquire small gym groups in European cities, and to replic-ate the strategy it has adopted in Paris. The plans come after CMG Sports Club’s majority shareholder, 21 Centrale Partners, started studying ways to capitalize on its investment.

n SATS, the Swedish gym operator, is launching outdoor classes for parents to run with a personal trainer (PT) and a baby stroller. The company has agreed a part-nership with Bugaboo, a brand of sturdy strollers, to pilot the classes at two gyms in Stockholm. Another pilot is to start in Gothenburg in August. The concept calls for a class of three to six people to run together with a PT on specific routes. They are using the Bugaboo Runner, which is suitable for children from nine months to three years, and allows them to face forward or back. Members who don’t own such a stroller can bring any other Bugaboo seat and lend the chassis from the gym. A spokeswoman for SATS pointed out that the concept is particu-larly relevant in Sweden, where parents of both genders tend to enjoy parental leave and are eager to continue exercising with others. There are two versions of these classes, one of them more spe-cifically intended to get in shape and the other for serious running – with strollers. The Swedish gym group already has an outstandingly child-friendly concept, MiniSats: It runs spaces of up to 200 square meters dedicated to children, with plenty of (preferably active) entertain-ment options and qualified staff to take care of them while their parents work out. MiniSats is available in 43 out of the 65 SATS gyms in Sweden for children from six weeks to ten years at no extra cost for one and a half hours.

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FITNESS NEWS Europe 7

Soft Side

Photo: Puma

Puma leaps into women’s fitness

Quick Read n Puma wants to “own the space between the gym and the runway,” says chief Bjørn Gulden

n Rihanna opens retail doors for Puma’s fitness products - and others

n Expanded range of performance fitness apparel

n Campaign supported by Intersport in European markets

n Move into small equipment market (probably) in second half

Puma has started invest-ing abundantly in the European women’s fit-ness market, which has

been earmarked as one of the categories to drive the German brand’s return to shape – with support from Intersport and Rihanna.

So far Puma’s push in the training category has been most conspicuous in footwear, with a global campaign fea-turing Rihanna along with the likes of Usain Bolt, the Jamai-can sprinter. But this year the brand is making a statement with women’s performance fit-ness garments that are meant to “own the space between the gym and the runway.”

The fitness gear comes from a Puma business unit set up about two years ago in Boston and led by Karin Baust, previously at Reebok and Nike. She leads a team of six people focusing on train-ing, in which the women’s training category covers fit-ness products.

While Puma has sold fit-ness products for many years, the latest offering embodies the brand’s new approach of the women’s market. “We have a strong and unique po-sition here, because we really bring performance and style together,” says Baust. “That’s what resonates very strongly with consumers and retailers.”

The approach transpires most clearly in the range of eight performance sports bras that has reached European stores in the last weeks. Al-

though Rihanna already dis-played a Puma Powershape training bra last year, it’s the first time that the brand mar-kets a full-fledged range of performance fitness bras, for a wide range of activities and with three levels of impact.

The brand has also struc-tured its much broader range of leggings to fit with various activities, from yoga to run-ning. “It’s not about more, it’s about making sure that when we’re making something, it has a purpose, and it’s the right style level, that it has the fash-ion element,” says Baust.

The range is supported by a brand campaign with ambas-sadors such as Jamie Granger,

Rihanna’s personal trainer, and Jenna Prandini, the U.S. sprinter. The American social-ite Kylie Jenner appeared in a Puma crop top and leggings as well.

Touch of flairAs Baust explains, the train-

ing range is targeted at women of 18 to 24 years and sets it-self apart from others with an added touch of flair. “From a performance point of view, we can do as much in bringing in-novation to products, I think we bring much more on the style side,” she says.

Puma’s investments in wom-en’s training fit with the brand’s broader focus on women. Bjørn Gulden, the company’s chief ex-ecutive, told analysts in a quar-terly call last week that Puma was getting back into some stores owing to its women’s products - and that their sell-through was outstanding.

The Norwegian executive was hired nearly three years ago when Puma was under pressure and its brand was tired. Puma’s fast rise in pre-

vious years had been driven by fashionable footwear and sports marketing with a twist, but both the brand and the company suddenly appeared uninspired.

Forever Faster, the strategy pushed by Gulden, aimed to make Puma more reactive and to shift its focus back to sports, with outsized investments in marketing.

Puma’s turnover jumped by 14.0% to €3,387.4 million last year, with about 37% of the sales coming from Europe, the Middle East and Africa. How-ever, the extra investments in marketing and unfavorable exchange rates reduced its op-erating profit margin to just 2.8%.

While Puma has long been the third-largest sports brand after Nike and Adidas, it was surpassed last year by Un-der Armour, which chalked up sales of $3,963 million. Several other brands became established as strong alterna-tives for Nike and Adidas, from Asics to New Balance, Reebok, Skechers and more.

As it set out to regain shelf space, Puma sometimes found that its strongest card was Ri-hanna. Puma signed the singer in December 2014, arguing that her stage performances required thorough training, and that her flair fitted with the brand.

“Purposeful, credible perfor-mance was there from the be-ginning but the style has come with someone like Rihanna,” says Baust. “That gives us an advantage with some of the big retailers. You can have a conversation where a retailer knows she will be involved, that changes the conversation.”

Forever FasterIntersport is one of the sport-

ing goods retailers that are most prominently supporting Puma’s training range in sev-eral European countries. The group’s campaign for training products is carried by Usain Bolt for men’s products and Ri-hanna for women’s.

The business unit driven by Baust also works with Team

Faster, consisting of fitness trainers and other influencers who help publicise the Puma training range. Fernanda Brandão, who is particularly popular in Germany with the

Ginga program, has been work-ing with Puma for several years.

Separately, Rihanna has been working on her own range, Fenty Puma by Rihanna. The singer scored a hit with the Creeper fashion shoe last year and this year Puma is adding the Fenty trainer, which is a more functional training shoe for women. Rihanna’s Fenty

apparel range appeared at the New York Fashion Week in Feb-ruary.

Along with its stronger em-phasis on training apparel and footwear, Puma is studying partnerships for small equip-ment and wearables. Baust said its license for small equip-ment could be finalised in the second half of this year for products such as mats, balls and resistance bands, covering Europe and the U.S. The part-nership for wearables would be a global project, more likely to be finalised in 2017.

Puma at FIBO

Puma Q1n Sales increase 3.7% to €852 million, +7.3% currency-adjusted.n EMEA sales rise 3.8% to €354.4 m, +6.6% currency-adjusted.n Outstanding sell-out for women’s fitness products.n Gross profit margin nearly flat at 46.8%.n EBIT up 10% to €41.3 m, net profit up 4.0% to €25.8 m.n Turnaround on track, says chief executive, guidance upheld.

8 FITNESS NEWS Europe

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