Xponential Cuts Outlook, Stays Mum on Possible Sale

A sale question still hangs over the boutique fitness franchisor in a year already marked by more than $43 million in legal settlements and declining sales

Xponential Fitness shares fell in after-hours trading on Thursday after the boutique fitness franchisor reported a second-quarter net loss and cut its full-year outlook, while executives declined to discuss the strategic review that could end in a sale.

Shares of XPOF, which closed down 5.36% at $6.36, dropped about 12% to $5.59 in after-hours trading on Thursday.

The parent of Club Pilates, Pure Barre, StretchLab, YogaSix and Body Fit Training posted revenue of $66 million, down 13% from a year earlier. Same-store sales fell 6.8% across the portfolio and 5% at Club Pilates, widely considered Xponential’s largest and most popular brand.

It lowered its full-year revenue guidance in the $250 million to $260 million range compared to previous guidance of $260 million to $270 million, and trimmed its growth plans. Xponential now expects to open about 150 studios this year, down from a prior range of 150 to 170 and from 201 openings in 2025.  

“While our second quarter results were below expectations, we continued to make progress against the priorities we believe are most important to strengthening Xponential for the long term, including continued studio growth, both domestically and internationally, enhanced digital capabilities and elevated franchisee studio support,” Xponential CEO Mike Nuzzo said. “These efforts, led by a strong management team working collaboratively across brands and functions, are laser-focused on driving long-term, sustainable growth and success for our franchisees.”

The company hired Jefferies in April to weigh a possible sale or merger, after pressure from shareholders Voss Capital and Kanen Wealth Management. Voss, its largest shareholder, has argued that Club Pilates alone is worth more than all of Xponential.

During the earnings call, Nuzzo appeared to reset expectations for Club Pilates.

“Going forward, we don’t need double-digit comps,” he said of the Pilates brand, noting it had historically produced them. Flat-to-modestly-positive sales, he added, would now be a good result.

The company is still adding Club Pilates studios. It opened the brand’s 200th international location in June and announced that its largest Club Pilates franchisee, Spartan Fitness Holdings, agreed to open 117 studios across 10 states over the next six years.

One brand collaboration Nuzzo pointed to was with Starbucks and its new protein coffee drinks, which he said gave Club Pilates access to about 120,000 Starbucks and Pepsi employees through an exclusive introductory offer. Starbucks is also slated to bring influencers into Club Pilates studios to try the workout.

Nuzzo, who took over as chief last August, has spent much of his first year clearing legal trouble.

Xponential reached three settlements this year worth more than $43 million combined — a $17 million FTC settlement, a $22.75 million payout to more than 500 franchisees and a $3.9 million agreement with New York related to allegations of misleading would-be owners about how long studios take to open. 

The last settlement is the largest that New York State has ever secured under its Franchise Sales Act, according to the state attorney general’s office.

Interim finance chief Robert Julian said legal costs have run close to $100 million over several years but are largely behind the company, describing them as unusual, non-recurring items that put pressure on cash. He added he projects positive cash flow in 2027.

Xponential’s struggles land against a softening consumer backdrop and it isn’t the only one feeling it.

Planet Fitness, which reported its own second quarter earnings on Thursday, said new member growth had cooled even as revenue rose, a sign the pullback is testing gyms across price points. McKinsey’s recent research found consumers cutting spending intentions across most discretionary categories, with even higher earners paring back “nice to haves.”

Peloton, reporting the same day, told a version of the same story: paid subscriptions fell nearly 9% for the year, with more declines forecast, even as it turned its first-ever annual profit.