British community-based active brand Gymshark is undergoing a restructuring of its business, and it is one that could eventually pave the way for an initial public offering in London.
Reports surfaced that the Solihull-based firm plans to shed about 121 jobs due to redundancies upon completion of the restructuring. The changes are due to the brand’s growth plans, including international expansion. Currently, the U.S. is currently the brand’s largest market.
Company founder and CEO Ben Francis said the changes would “ensure customer strategies are driven by local lenses, specific knowledge and data, not just by those of us here in Solihull,” according to the Financial Times. The changes are to help with its global growth strategy and ensure the necessary skills where needed.
A BusinessLive report in the U.K. added that the “proposals are still subject to consultation,” citing attribution to Francis. The CEO also noted that new roles would be created in the restructuring.
Both reports cited Francis as indicating that the changes could see the creation of more than 100 new roles, with at-risk employees offered the positions where possible.
Francis retains a majority stake in his firm. It counts American private equity group General Atlantic as a minority investor since September 2020, according to the financial sponsor’s website. There have been rumblings overseas that Gymshark was considering an IPO, although the brand has remained mum about that possibility.
However, companies typically begin to think about growth strategies and expansion plans about a year or so prior to an IPO. The idea to think more locally is the latest trend in retail as brands plan for ways to retain a loyal customer base based on local needs. Moreover, private equity firms since the Great Recession have shortened their investment holding times from five years to an average of three. An IPO is one way financial sponsors can exit their investment stakes. But even if financial backers choose to sell to another investor, identifying growth avenues and putting a plan in place is still vital to showing investors there’s a long runway ahead and higher revenue streams.
Offering a merchandise mix for men and women, the brand is popular among the millennial and Gen Z sports-and-gym crowd. The company site said its purpose is to “unite the conditioning community.” Gymshark was started by Francis in 2012 from a garage in Birmingham, U.K.
The company, which primarily has been an online retailer, in December disclosed plans to open its first physical store at 165 Regent Street this summer.
The activewear market has seen a boom in popularity since the onset of the pandemic as consumer behavior shifted under lockdowns.
The Financial Times story said the company increased sales by more than 50 percent for the year ending July 2021 to more than 400 million pounds ($556.2 million) from 260 million pounds ($361.5 million) the year prior.