Connected fitness company Hydrow, which Platoon Once tried to buy, it's ramping up sales and has acquired a majority stake in strength-training company Speede Fitness as gym-goers shift away from cardio in favor of weights, the company told CNBC on Thursday.
Hydrow also announced that its CEO and founder, Bruce Smith, will step away from day-to-day operations and hand the reins to president and CFO, John Stellato. Smith will assume the role of chairman of Hydrow's board of directors.
The company, best known for its expensive connected rowing machines that cost between $1,700 and $4,000, is backed by private equity bigwigs Constitution Capital and L Catterton. It counts several professional athletes and celebrities among its investors, including Kansas City Chiefs tight end Travis Kelce and singer Justin Timberlake.
Hydrow has raised more than $300 million in funding. He said he acquired Speede Fitness so he could expand into strength training, one of the fastest-growing segments of fitness today.
The takeover comes as gym-goers abandon cardiovascular exercises, such as running and cycling, in favor of weight training.
Planet Fitness said in November that it would replace its cardiovascular equipment more slowly, in part to free up capital.
“Our members are consistently looking for more strength and less cardio,” Planet Fitness CFO Thomas Fitzgerald said on the company's third-quarter earnings call, adding that strength equipment costs less than strength equipment. cardiovascular.
Fitness for life highlighted a similar trend in its annual fitness survey. More than a third of respondents said “building muscle” is their number one goal for 2024, an increase of more than 3% from the previous year.
Speede Fitness makes a connected strength training machine that looks a bit like a BowFlex, but incorporates advanced technology, such as AI cameras, sensors, and a large touch screen.
“Strength training has one of the largest total markets in fitness, and with Speede's advanced technology surpassing current offerings, this acquisition is an important milestone for both companies,” Hydrow said. “This investment supports Hydrow's mission to expand as a whole-body health company… with a consumer product expected to hit the market next year.”
The Hydrow acquisition and sales growth come as Peloton, which is credited with creating the connected fitness market, struggles to turn around a slowing business. At its height at the height of the Covid-19 pandemic, Peloton tried to acquire Hydrow instead of building its own rowing machine, but the company refused, he told CNBC. Peloton did not respond to CNBC's request for comment.
Now, Peloton has become an acquisition target as numerous private equity firms are considering taking it private after it posted another quarter of declining sales and losses, CNBC reported Tuesday.
Peloton has said demand for its fitness equipment has been slow as consumers recall big-ticket items. Still, Hydrow has managed to grow as Peloton has shrunk.
Hydrow's delivered unit sales for its connected rowing machine are up 23% this year from the same period last year. At Amazon, sales increased 273% in the 12 months ending March 31 compared to the year-earlier period.
Hydrow's growth raises questions about whether Peloton's problems are more related to weakness in the broader home fitness market or its internal stumbles and product missteps. Additionally, the company primarily sells cardio machines, which are falling out of favor with consumers, and its own members are turning to strength training in droves. The company has said that its strength training content, not its cycling or running classes, is the most popular type of class for digital members and No. 2 among those who have Peloton hardware.
Peloton debuted its rowing machine, Peloton Row, in September 2022, but has done little to advertise or highlight the $3,000 machine.
It previously introduced Peloton Guide, an AI-powered device for guided strength training at home, but the device has received even less attention than the company's rowing machine.
In Peloton's fiscal third quarter shareholder letter, the Guide received a mention. This was a write-down of approximately $9.1 million that the company took on its product inventory.
