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The Fitness Experience is continuing to shrink its numbers — even sealing a deal to hand-over five St. Louis, Mo., area stores to True Fitness — as a way to focus, to rein in expenses, to stay alive and, as President Doug Pearson told SNEWSÂ®, to get stronger.
With five closures in late April and early May (see SNEWSÂ® story May 14, 2004), combined with eight additional closures since then in Michigan, Ohio, Missouri and Illinois, as well as the sale of five stores to True Fitness, the Midwest-focused chain is now down to 36. That’s only one more than it had when it had announced its acquisition of Exercare with much aplomb at the Health & Fitness Business show not quite two years ago. With that announcement, it suddenly became a 55-store chain and the largest retailer in the nation, before it hit a bumpy road in 2003.
“We’re not going to make projects out of (some stores) when it’s clear we’re wasting our time and resources,” Pearson said. “It’s nothing to do with ego. It’s a smart business decision.”
Regarding continued rumors that the Chicago, Ill.-based chain was preparing for bankruptcy, Pearson said he didn’t consider that an option. “The situation,” he said, “doesn’t deserve the use of the word ‘bankruptcy.'”
Meanwhile, the deal to allow True Fitness to acquire its five St. Louis stores (two others had just been shut) will close August 1, but both True CEO Frank Trulaske and Pearson said it was as good as done.
“This is a fast timeline,” Trulaske told SNEWSÂ® as he was driving to a St. Louis Cardinals game Friday afternoon. “We’re going to have our hands full making this successful.”
Trulaske said he can’t comment on whether the stores were in exchange for debt owed the supplier which made up about a third of The Fitness Experience’s sales. Instead, he pointed out that True has been interested for awhile in acquiring some retail stores, not only so the supplier could learn more about what its dealers face day-in, day-out, but also so the venue could serve as a place to educate and to train staff and to get ideas.
In an official statement, Trulaske said the stores would allow True “to create new and leading-edge concept stores. We intend to use these stores to pioneer retailing and merchandising concepts for our more than 300 independent dealers worldwide. And there is no better place to do this than in our hometown.”
Pearson called the deal “an important compromise,” but a good way to free up resources the chain could put to work in other districts. In addition, he said, there had been a strain in managing stores in different states, with varied weather and customer preferences, all of which meant the St. Louis stores hadn’t been performing as expected.
“It made some sense to meet True half-way, to listen to their desires to get our deal done,” Pearson said. “True has been a good partner over the years.”
In another deal quietly settled in mid-June, Life Fitness took over TFE’s commercial fitness division in what Pearson called a “hand-off,” not a trade or sale. He said that all 12 of its commercial reps who focused on Chicago, Detroit and Milwaukee areas were offered jobs by Life Fitness, although insiders tell SNEWS that only nine accepted. Life Fitness also makes up approximately a third of the chain’s sales. Vision Fitness as of 2004 has its stamp on much of the remaining third. Pearson said its other core retailers are Vectra and Hampton. Aerobics (Pacemaster treadmills) and TFE recently went their separate ways, Pearson said.
“They’re all excited about a leaner, meaner Fitness Experience,” Pearson said.
Trulaske meanwhile said that his company will evaluate whether it should keep the same name on the stores or change it, but it will take its time to decide. When it comes to brands that will remain under the new ownership, he said “we’re talking about it with the others.”
“We’d like to continue with Vision and Life Fitness and the others,” Trulaske said.
If all goes as planned, this should be the end of store closures for TFE as it enters a long-term business plan, just finished a few weeks ago, that will direct it into 2010.
“We made some drastic changes, but the go-forward model will be a lot quicker,” Pearson concluded. “It’s a very exciting time for Fitness Experience.”
SNEWSÂ® View: The retail scene has sure changed dramatically in the last year. Busy Body of California has been on an acquisition roll and insists (at nearly triple in numbers what it was last summer), it won’t make the same mistakes as the old Busy Body. Meanwhile, it seems like yesterday that The Fitness Experience and Exercare staffs showed up on the last day of the Health & Fitness Show in Denver not quite two years ago all wearing TFE shirts — and huge grins. Exercare owner Brian Massie and Pearson shook hands and held court about the strength its Midwest dynamo would bring to the retail scene. Instead, the details of the merger of the two chains and cultures took nearly a year, didn’t go as smoothly as planned (does it ever?) and therefore put a huge burden of extra expenses and worries on the management and staff. Instead of basking in its post-merger rewards, the chain has been left trying to untangle its feet while also attempting to execute a fast two-step to re-align and to stay alive. With two of its largest three suppliers (that would be True and Life) now satiated with deals, we do wonder how long it will be before Vision pulls out if it doesn’t get what it’s owed. And what about Vectra and Hampton and even the smaller accessory suppliers? We’re not sure how long they can wait or what kind of cuts in profits they’re willing to take. But we’re betting this isn’t the last retail shake-up we’ll see yet this year. And if we were taking bets, it is even money that TFE might have to undertake additional closures or hand-offs if it’s to avoid the B-word.