Mini
Cult.Fit’s plan to begin its run toward public markets comes as the fitness industry recovers and gyms and offline fitness centers return to near-normal after the pandemic-related disruption.
Tata Digital-backed Cult.Fit is working to become IPO-ready in 12 to 18 months, with a goal of achieving enterprise-level operating profitability by mid-2023, an executive told CNBC. TV18.
Cult.Fit’s plan to begin its run toward public markets comes as the fitness industry recovers and gyms and offline fitness centers return to near-normal after the pandemic-related disruption.
In the 2020-21 financial year, the company suffered a triple drop in sales to Rs. 160 crore from the previous financial year while losses totaled Rs. 670 crore amid layoffs, pay cuts, gym closures and a rollback of operations in the small Indian town.
In view of the recovery since April this year, however, Cult.Fit is confident of being able to end the current financial year on a positive note. “Total sales are up 50 percent compared to pre-pandemic levels,” said Naresh Krishnaswamy, Business Head, Cult.Fit.
“At the Cure.Fit level, we will be EBIDTA positive by the middle of next year,” he added. EBIDTA is earnings before interest, depreciation, taxes and amortization.
Two of Cure.Fit’s three verticals have become operationally profitable. These are Cult.Fit Fitness and Direct-to-Consumer (D2C) companies. The third is the wellness vertical, which includes Mind.Fit and other offerings that are now being shelved as the company focuses on companies “that currently have the highest demand and are paving the way to profitability.”
Bending the Cult.Fit fitness arm
From 250 centers before the pandemic, the Zomato-supported company has expanded to 600 centers in 40 cities as demand for traditional gyms, online fitness classes, group fitness classes and sports units increases, particularly in small towns in India.
The company’s linchpin during the pandemic of going asset-light with a franchise model “is working really well.” Currently 400 of the 600 centers are operated by franchisees.
“In the next 2-3 years, we aim to reach 1,000+ centers powered primarily by franchise and 3P networks,” said Krishnaswamy, emphasizing that the fitness business – online and offline – accounts for 2/3 of total sales while the rest comes from the D2C business.
Cult.Fit’s current fitness center network includes Gold’s Gym Outlets in India, for which it became the master franchise in India through the acquisition of a majority stake in F2 Fun & Fitness earlier this year.
Bend the other arm
Cult.Fit also operates its own e-commerce marketplace with offerings such as clothing and accessories such as treadmills, spin bikes, sportswear and more.
“All of our sales are done through our cult.fit app and offline at the sales center,” said Krishnaswamy.
To expand its offerings on e-commerce platform D2C, Cult.Fit has acquired home cardio equipment brands such as RPM Fitness, Fitkit and Onefitplus. In all, the company has made at least 14 acquisitions, including premium bike maker Urban Terrain.
“We are always on the lookout for acquisition opportunities. Right now we are focusing on the fundamentals of the business,” said Krishnaswamy.
“This business has been operationally profitable for the last year and has immense potential as it is a very large market and a billion-dollar business,” he added.
Founded in 2016 by Myntra co-founders Mukesh Bansal and Ankit Nagori, Cure.Fit also acquired Fitso from Zomato last year, securing a $50 million cash injection in exchange for a 6.4% stake from the now publicly traded food tech giant.
Previously, the fitness company received the backing of Tata Digital, with Bansal joining the Tata Group as President of the newest company. Ankit Nagori has since left the company and now runs his own Cloud Kitchen brand house under CureFoods.
First published: 10/19/2022, 21:23 CET
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