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PureGym chief: keeping faith in the business model

Like any modern gym enthusiast, Humphrey Cobould, CEO of PureGym, keeps a close eye on the numbers.

When gyms closed at the start of the UK’s first closure in March 2020, many perceived them as virus-friendly places. But the boss of the UK’s largest fitness network has decided to lead in the development of industry protocols for opening gyms safely.

Cobold says business leaders need to express themselves on issues in which they have expertise. He began lobbying for sector support, and appeared regularly in the media. “I think there’s a bit of a tendency for businesses to shrink into the background,” he says. “There are concerns about how Supports business The government is. . . But in this case, I felt we had to get up and be visible. “

His work was stopped. Cobould presented the sector protocols to Deputy Chief Medical Officer Sir Jonathan Van Tam and other SAGE scientists on a visit to Park Royal PureGym in west London. When Van Tam saw the slippery fitness studio, he suspected on a smoke screen that he had been introduced to PureGym’s smartest website. But the 57-year-old Cobold told him: “It’s £ 23 a month… That’s what a modern gym looks like.”

Fearing a government blind spot on the UK gym sector, which Deloitte consultants estimated at £ 5.5 billion in 2019, he wanted to build a evidence base on the industry’s Covid-19 contamination. Can get McKinsey out of the man, ”he jokes, after spending his early career in management consulting.

PureGym has led the development of data on gym infections with the ukactive industry association. Preliminary research found a total of 78 corona cases on 22-minute visits to the gym. Repeated lobbying, backed by these data and other studies, has helped convince policymakers that gyms are relatively safe. They will open indoors in the UK before the pubs after the 2021 lockout.

While Cobold had one eye to reopen, he also had to lead the “immediate crises” of the plague. This included a discussion of rent deferrals with the company’s 250 landlords and the decision to cover the holiday pay of the 2,000 PureGym personal trainers who missed out on government payments. In early 2020, the company also bought Danish operator Fitness World for £ 350 million. The company lost almost £ 200 million, compared to £ 39.6 million in 2019, a hit that Cobould described at the time as “to be honest, terrible”.

And the heavy losses continued last year as well. PureGym had a net debt of more than £ 800 million, compared to profits of just £ 70.9 million, during the nine months to September 2021. In addition, an attempt to go public offered failed. Cobould and Chief Financial Officer Alex Wood “had not really had a day off between May and December,” he says, as they prepared to list – something Cobould previously tried at the company in 2016.

But PureGym had to “raise quite a bit of capital to pay off the debt and raise enough cash.” As public offerings slowed towards the end of 2021, Investor confidence has waned And PureGym retreated. Cobould says he was “frustrated and not disappointed” that “the markets were not responding as we should have”.

Despite the high debt levels, Cobold’s confidence comes from the business record. In 2016, PureGym was worth around £ 550 million – it is now valued at more than £ 1.5 billion, he says. “It frustrates me that public market investors have not been able to see through some of the short-term fluctuations in the market.”

Indeed, going through the epidemic required trust in the model, as well as an “act of faith” that the presence would return, he says. Now, PureGym is looking forward to enjoying fitness enthusiasts who want to take down their memberships to manage The cost of living crisis.

And his proposal was left with no obvious ripples: the Oval place in south London where we meet is not glamorous. But, like its 300 sites in the UK, the space is airy and fully functional for 20-year-olds who spend their Wednesday morning there at a cost of about £ 25 a month.

Cobbold is proud of PureGym’s ‘budget status’ and accessibility. “I think it’s the standard gym product that people are looking for. Of course, some people are happy to pay £ 100 or £ 150 to go to a place with a little more granite and a little more glass and a little more chrome,” says Cobold, but it’s not the PureGym model. .

The company offers non-contractual companies and has a variable pricing model, with costs ranging from £ 46.99 per month for regular companies in Clapham, south London, and up to £ 17.99 per month for the same package in Grimsby, North East England. This is a sign, he says, of how to run a simple business in a “sophisticated way.”

Three questions for Humphrey Cobull

Who is the hero of your leadership?

The late Andrew Grove, former CEO of Intel. He was not a big and showy leader or anything but he had some key principles. He said the problem with most successful businesses is that they are proud of this success. That success leads to complacency and complacency is almost always a prelude to failure. This ethos of healthy paranoia.

What was the first leadership lesson you learned?

The importance of authenticity. If you’re leading, people are looking for you and you can reasonably expect them only if they believe the person you are introducing is real.

What would you do if you were not a CEO?

scientist. I studied science at Cambridge, I wanted to be a nuclear physicist. I did some scientific specializations in research but it was not so exciting because reading about Einstein made everything sound and I was tempted by the interest in business.

Not deterred by the failed initial public offering, Cobold has pursued funding elsewhere and is making a small-scale expansion in the U.S. “We stopped the IPO process at the end of one week and moved on to discussions with private equity providers next week.” Fund PureGym’s international expansion programs. This is a familiar way: In 2017, the American private equity group Leonard Green & Partners bought most of the shares in PureGym from CCMP Capital Advisors.

Cobould rejects any claim that, under ownership of private capital, it has no control over the direction of PureGym. Decisions such as expanding to the U.S. or launching a Pluto-style bike are made in consultation with PureGym private equity holders.

“As CEO, you have to be clear and honest,” he says, “but it’s not just my way or the highway.” His collaborative approach leads to “strong debates,” he says, but also fosters trust in his leadership. 11,000 miles and eight time zones, “he says.” They know they trust us and my feeling about the market. “

We’ll talk the week after John Foley backed away As CEO of Pluto. “Geek” cyclist and former CEO of online sports retailer Wiggle, Cobbold says he uses Zwift’s bike platform, not Pluto. And although he adores the business, he says he “probably got a little carried away with things.” PureGym’s U.S. investment will be small, opening three sites would risk about $ 20 million, he says. “If even a modest-sized business is built in America, it could be 100 or 200 sites that could be worth between $ 300 and $ 500 million.”

The cautious optimism of not “betting on society” for expansion is reminiscent of Van Tam’s warnings to refrain from “ripping the pants off” from the epidemic’s limitations. With a trained eye on the data, Cobold says, “If it works, great, if it does not work, we will learn why it does not work.”

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