GYMSHARK PARTNERS WITH GENERAL ATLANTIC VALUING COMPANY AT OVER GBP 1 BILLION
©Gymshark
Gymshark, the fitness community and apparel brand, has announced it will enter a strategic partnership with General Atlantic, a leading global growth equity firm, in its first-ever fundraise, valuing the business at over GBP 1 billion, benefiting from the latest trends in the fitness industry and among direct-to-consumer brands.
Gymshark was set up in 2012 by Ben Francis when he was 19, in his parents’ garage, having been taught to sew by his Mom. As the company grew, so too did the leadership team. In early 2015, Steve Hewitt joined as CEO and Paul Richardson as Executive Chairman. Since then, the company has achieved significant momentum, assembling a community of over 12 million followers on social platforms. The company has struck a chord with the 16-24-year-old market with its aspirational fitness apparel as increasing numbers of young people become health conscious.
In conjunction with General Atlantic’s investment, Francis is increasing his stake in the company to over 70 per cent. The investment will see General Atlantic take a 21 per cent stake in the business, and Melis Kahya Akar, Head of Consumer for EMEA at General Atlantic, will take a seat on the board. Gabriel Caillaux, head of General Atlantic's business in EMEA, described Gymshark as “authentic, disruptive and differentiated” as a brand. Against a backdrop of rising social media usage, rapid growth of e-commerce and increasing focus on health and wellness, Gymshark is positioned to seize the opportunity of further growth.
New fashion business cases such as Supreme and Reformation have managed to attract private equity interest in recent years, given their level of sales and attractive brand equity that appear to have unlocked an insight into what the modern consumer desires. The market got wind of private equity giant Carlyle’s investment in streetwear brand Supreme, which had previously invested in Moncler that eventually resulted in a close-to USD 1 billion initial public offering. The firm’s portfolio also included Golden Goose sneakers, which they sold to Permira at the beginning of the year. In turn, Permira that once also owned stakes in high-end fashion houses Valentino, Hugo Boss and Proenza Schouler, all of which it exited successfully, acquired Reformation, an upcoming direct-to-consumer fashion label last year in July.
Despite a global pandemic, Gymshark has continued to succeed, benefiting from the popularity of running, cycling and exercise at home during the lock-down. At the start of 2020, Gymshark reported its strongest ever quarter for revenue growth while in the 12 months to July 2019, revenues grew from GBP 103 million to GBP 176 million, according to the company’s latest accounts. Pre-tax profits increased from GBP 17.5 million to GBP 18.4 million. According to the company, full-year revenues to July 2020 were GBP 258 million. Not only did it report its strongest quarter in Q1 2020 in terms of revenue growth, but it has also given back to the community.
Ben Francis, Founder of Gymshark, said: “We are nothing without our community, so we will use this new investment partnership to get even closer to them on a truly global scale. Melis Kahya Akar, head of consumer for EMEA at General Atlantic, who will take a seat on Gymshark’s board, added, “Fitness apparel is a large and resilient market with growth potential. Gymshark has managed to create a substantial social community around its products and services, generating brand awareness and loyalty.”
Gymshark has become a hit with younger gym goers. It does not use the traditional combination of advertising and high street shops for promotion, relying instead on support from a network of athletes and social media “influencers” on Instagram and Facebook. Francis said that the company would not change its approach to sales and marketing after the fundraising and that he had always been against the “old school” approach of rivals that focused on putting as many products as possible in as many stores on the high street. The investment would be used to help expand the business in North America, where Gymshark already makes a large part of its sales, as well as expanded into Asia.