Competing Titans: The Potential Advantage of Gymshark's Public Debut Against Goliath Rivals Nike and Adidas
Going for Globe Domination: Gymshark's Bid to Compete with Nike and Adidas
According to Danni Hewson, head of financial analysis at AJ Bell, Gymshark, the billionaire Ben Francis-founded activewear brand, may need to beef up its presence if it aims to take on industry giants like Nike and Adidas. This could potentially lead Gymshark to consider an Initial Public Offering (IPO) to secure the necessary funds.
While Gymshark currently has a "significant credit facility" at its disposal, its profits have decreased for three consecutive years, as noted during the latest financial period. However, the company achieved a valuation of over $1bn in 2020 after obtaining the backing of New York-headquartered General Atlantic. This deal saw General Atlantic snatch a 21% stake in Gymshark and increased Francis's holdings to over 70%. The partnership aims to facilitate further growth and international expansion, specifically into North America.
Recently, Gymshark has announced plans to "strategically invest" in its omnichannel expansion, with stores planned for London, New York, Dubai, Amsterdam, Manchester, Bicester, and a New York City headquarters. These moves are designed to boost its US business and continue its investment into its digital technology stack. Gymshark has remained tight-lipped on the possibility of a public listing.
The push for global domination is not unique to Gymshark, as UK activewear brand, Castore, is also speculated to consider a public offering in the coming years. Co-CEO Tom Beahon expressed apprehension about London Stock Exchange offering something appealing enough to convince his company to float in the UK, as opposed to overseas.
Overall, Gymshark's plans for international expansion center around building a robust retail presence and ensnaring the funding needed to compete with titans like Nike and Adidas. Although facing rising costs and challenging economic pressures, Gymshark is resolute in its determination to transform into a full omnichannel business and maintain its reputation over the long term. While an IPO remains a possibility, Gymshark has demonstrated caution by balancing growth investments with cost control, suggesting a balanced approach as it forges ahead in the competitive sportswear market.
Global Footprint Expansion- Revenue growth internationally reported at 20% and a 6% increase in North America (adjusted for currency) [3].- Investing in brick-and-mortar retail expansion, including a new retail concept represented by its Stratford store and a flagship store planned for New York.- Strong online presence marked initial growth during the pandemic years [1].- Committed to controlled expenditure to become an omnichannel business and sustain growth long-term [5].
Potential IPO- Protracted discussions about a Gymshark IPO to fuel global ambitions and better compete against industry heavyweights.- Estimated that an IPO might be necessary due to slowing growth and the need for expansion capital [1].- Access to substantial credit facilities, but may seek public markets for funding to expand retail footprint and incorporate additional labor and property costs [1].- IPO considerations reflect Gymshark's ambitious plans to secure global domination in the sportswear market [1][5].
Financial Context- Toppled the £600 million revenue mark for the first time in FY24 and projected to break $700 million in annual sales in 2025, placing it among the leading direct-to-consumer sportswear brands globally. [4][5]- Despite revenue growth, profits have dipped due to escalating operational costs and expansion investments; pre-tax profits slipped to £11.8 million in FY24 [5].- Maintained profitability and reported increases in EBITDA, signaling progress despite macroeconomic hurdles [3][5].
In essence, Gymshark's global expansion strategy revolves around fortifying its international markets via both online and strategic brick-and-mortar outlets, including a new Stratford store concept and a flagship New York store. To fund this growth andMeet competitors head-on, Gymshark is mulling over an IPO, which could provide the capital needed to expedite its push for global dominance in the sportswear market [1][2][3][5].
- Gymshark's ambition to compete with industry giants like Nike and Adidas might lead them to consider an Initial Public Offering (IPO) to secure necessary funds.
- The company's recent strategic investment in omnichannel expansion includes plans for stores in multiple global cities, such as London, New York, Dubai, and Amsterdam.
- With a valuation of over $1bn in 2020 and partnerships with firms like General Atlantic, Gymshark aspires to further grow and expand internationally, particularly into North America.
- While an IPO could offer Gymshark the capital to fund its global expansion, the company currently has a significant credit facility at its disposal.
- The push for global domination is not exclusive to Gymshark, as UK activewear brand Castore is also speculated to consider a public offering in the coming years.
- To sustain its growth over the long term, Gymshark is committed to balancing growth investments with cost control, demonstrating cautious determination in transforming into a full omnichannel business.
