F45 losses soar, franchisees cancel sales

Beleaguered fitness group F45 said more than 300 US franchise sales were canceled due to the collapse in outside funding last month, but assured investors financiers remain supportive of its operations as it reported a loss. of $38.5 million ($54.8 million). for the June quarter.

Publishing its results after the Wall Street close, the Mark Wahlberg-backed group reported revenue of just over $30 million for the quarter, with $19.1 million coming from franchise fees, but a lack of third-party financing has affected their growth.

Mark Wahlberg with F45 CEO and co-founder Adam Gilchrist on the NYSE float last year.Credit:access point

“In total franchises, sales decreased by 175 in the [US] region. Franchise sales in the US will comprise 132 gross franchise sales, less 307 terminations during the quarter,” said F45 interim CEO Ben Coates.

“The terminations were due to the impossibility of franchisees to access financing facilities, we announce that the end of [the first quarter].”

F45 said another 300 multi-unit franchise sales are still in the pipeline, representing 45 percent of its sales pipeline, and said it doesn’t think this entire sales block will be “wiped out” by the funding collapse. .

The Australian-founded group, which was listed on the New York Stock Exchange in July last year, has seen its share price fall by more than 90 percent. This followed a disastrous downgrade last month that forced out its high-profile CEO Adam Gilchrist (not the cricketer) and half his staff, as the company cut sales and profit forecasts and warned that it might not honor its debt covenants.

Coates, and chief financial officer Chris Payne, said the group is on track to contain losses and generate free cash flow this year and confirmed it “will not come close to tripping debt covenants” despite a massive increase in debt levels.

Last month, F45’s share price fell as low as $1.35, more than 90 percent below the $16 paid by investors in July last year. Shares are 2 percent lower at $1.98 in after-hours trading.

Sales forecasts of 1,500 franchises this year have evaporated. F45 is now targeting as few as 350 franchises.

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