Gymshark Optimistic as Profits Drop but Sales Stay Strong
The activewear brand says it’s set itself up well for future growth, pointing to its decision to keep investing globally despite challenging economic conditions
Despite positive sales in the United States, U.K. activewear brand Gymshark has reported a 39% drop in profit for the year to July 2022.
In announcing its latest financials, the company stated that the fitwear business was “affected by the general economic environment,” but that it remains upbeat about the groundwork it has laid to advance the expansion of Gymshark.
Despite the profit drop, Gymshark sales have remained strong, with a 21% increase in revenue to $605.3 million for the year, compared to $502.1 million in 2021. Almost half of the activewear brand’s revenue is generated in the U.S., with less than 20% coming from the U.K., according to The Business Desk.
Gymshark also reported its gross profit margin fell to 65% from 70% the previous year. The company said that like others in the apparel industry and elsewhere, that drop is due to the economic environment.
The activewear brand said that increased discounting, the establishment of Gymshark’s U.S. distribution centers and the opening of its Regent Street flagship location in London also contributed to the dip.
Additionally, Gymshark laid off 65 employees in the U.S. earlier this year, costing the company $2.7 million in restructuring costs. Gymshark stated at the time that the layoffs in Denver, Colorado, were intended to safeguard the future of the business and centralize its operations.
By all accounts, Gymshark appears to be taking the profit dip in stride, unbothered and focused on its future.
“Apparel businesses have been hit by rising input costs in their supply chains, whether from rising raw materials, fuel and labor costs or increased freight and logistics costs,” a Gymshark spokesperson told Drapers regarding the latest financial news. “The consumer has had more opportunities to apply discretionary spending to entertainment and travel, but inflation and rising costs also affect spending. So, yes, there have been challenges, and it would have been tempting to hold on to the money in the bank.”
The Gymshark spokesperson went on to say that, unlike others, the athletic brand refuses to be swayed by macroeconomic conditions and has invested in international markets and its new flagship location on Regent Street – endeavors that Gymshark says are now outperforming its forecasts and setting the company up for further growth.
“Our decision to invest when we did is now paying off globally, as we are seeing double-digit growth in our revenue and trading in line with our group forecast,” the spokesperson added.
The athletic wear brand, founded in 2012 by Ben Francis, has been on a fast track due to its soaring popularity on social media platforms with the help of influencers.
The brand recently appointed social media sensation David Laid as its creative director. The Gymshark newcomer has a significant following after going viral for a transformational weightlifting video.
Gymshark has also returned to hosting community-building events, recently celebrating in Manchester for a lift event that signals the re-launch of fitness-based gatherings that include athlete seminars, meet and greets, competitions, challenges and prizes.
