Affiliate fitness company Hydrow, that Platoon once tried to buy is growing sales and has acquired a majority stake in strength training company Speede Fitness as gym-goers forego cardio exercises in favor of weights, the company told CNBC on Thursday.
Hydrow also announced that CEO and founder Bruce Smith will step back from day-to-day operations and hand over leadership to President and Chief Financial Officer John Stellato. Smith will take over as chairman of Hydrow's board.
The company, best known for its expensive rowing machines that cost between $1,700 and $4,000, is backed by private equity giants such as 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. It said it has acquired Speede Fitness so it can expand into strength training, one of the fastest growing segments in fitness today.
The acquisition comes as gym-goers are pulling back on cardio exercises such as running and cycling in favor of strength training.
Planet Fitness said in November it would replace its cardio equipment more slowly, partly to free up capital.
“Our members are consistently looking for more strength and less cardio,” said Thomas Fitzgerald, CFO of Planet Fitness, about the company's third-quarter earnings results, adding that strength equipment costs less than cardio equipment.
Lifelong fitness highlighted a similar trend in its annual fitness survey. More than a third of respondents said “building muscle mass” is their top goal for 2024, an increase of more than 3% from the previous year.
Speede Fitness makes a connected strength training device that looks somewhat like a BowFlex, but includes advanced technology such as artificial intelligence cameras, sensors and a large touchscreen.
“Strength training has one of the largest addressable markets in fitness, and with Speede's advanced technology outperforming current offerings, this acquisition is a significant milestone for both companies,” said Hydrow. “This investment supports Hydrow's mission to expand as a whole-body healthcare company… with a consumer product expected to hit the market next year.”
Hydrow's acquisition and revenue growth comes at a time when Peloton, which is credited with creating the connected fitness market, is struggling to turn around a slowing business. In its heyday, at the height of the Covid-19 pandemic, Peloton tried to acquire Hydrow rather than build its own rowing machine, but the company declined, it told CNBC. Peloton did not respond to CNBC's request for comment.
Now Peloton itself has become a takeover target as numerous private equity firms consider taking it private after it posted another quarter of declining sales and losses, CNBC reported Tuesday.
Peloton has said demand for its fitness equipment is sluggish as consumers retreat from the expensive items. Yet Hydrow has managed to grow while Peloton has shrunk.
Sales of units supplied by Hydrow for its connected rowing machine increased 23% this year compared to the same period a year ago. On Amazon, sales rose 273% in the 12 months ending March 31 compared to the prior-year period.
Hydrow's growth raises questions about whether Peloton's problems are more related to weakness in the broader at-home fitness market or its internal stumbles and product misses. In addition, the company mainly sells cardio machines, which are falling out of favor with consumers, and its own members are doing strength training en masse. The company has said that strength training content, not 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, the Peloton Row, in September 2022, but has done little to advertise or showcase the $3,000 machine.
It previously debuted the 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 third-quarter fiscal shareholder letter, the Guide received one mention. At issue was a write-down of approximately $9.1 million that the company had taken on its product inventory.