The big Italian-based fitness equipment supplier is shifting its focus from the gyms to the consumer after booking a 50 percent sales increase in its relatively small Home & Consumer segment for the first half of this year, as more and more people performed their workouts at home rather than at the gym because of the coronavirus pandemic. In this context, Technogym’s management will present a new investment program for the expansion of its direct-to-consumer (DTC) offer at the next meeting of its board of directors.
The company wants to accelerate the development of DTC solutions through the offer of “engaging and personalized training experiences, live and on-demand” on its Technogym Live platform, using mobile devices and TV, at home and in the gym. As part of its “Wellness on the Go” strategy, Technogym wants to let more consumers choose their favorite trainers and training content, developed by the company with the aid of artificial intelligence in collaboration with the fitness clubs. The company says that thousands of fitness clubs have already evolved their business model thanks to its MyWellness digital platform, offering online training programs to their members at home or at the club.
Meanwhile, Technogym reported a 24.7 percent decrease to €222.4 million in its total revenues for the first six months of 2020, with a drop of 24.9 percent in constant currencies. A spokesman declined to specify the amount achieved in the Home & Consumer segment, but the company pointed to the excellent performance generated by the two sales channels most used for at-home training solutions. Inside sales – which come from e-commerce and teleshopping – grew by 46.2 percent to €28.3 million, and retail sales – which come from Technogym’s nine directly operated stores – rose by 27.7 percent to €4.9 million.
In contrast, the two channels used for B2B transactions with gym operators, hotels and similar clients registered strong declines as many procurement projects were postponed. Field sales fell by 32.1 percent to €143.2 million, as they were impacted more than other sales channels by the pandemic, and wholesale revenues dropped by 24.6 percent to €46.0 million.
Because of a stronger impact of the virus on orders by gyms and hotel operators, North America was a region where the company’s overall sales declined sharply. They fell by 32.2 percent to €28.3 million. Sales in Italy declined by only 0.4 percent to €25.7 million as some orders were postponed from 2019 to the first quarter of 2020. In the rest of Europe, sales went down by 24.0 percent to €105.9 million, with the U.K. and France registering the strongest drops. Weak performances in China and Japan led to a 26.2 percent decline to €39.2 million in Asia-Pacific. The biggest drop was recorded in Latin America, down by 48.6 percent to €5.6 million.
Technogym reported a 54.8 percent drop in its adjusted net income to €11.4 million for the period. The adjusted Ebitda margin declined by only 0.3 percentage points to 16.8 percent, thanks to a reduction in operating costs, which did not impact the company’s strategic development projects, the company pointed out. However, a growing focus on innovation led to higher depreciation charges of €2.5 million, which caused the net operating income to decline by 47.8 percent to €17.9 million.