More than 30 staff will be laid off at the Kayla Itsines’ company’s Adelaide headquarters, reducing local staff numbers to just 45, down from close to 100 at the company’s peak last year, The Advertiser reported.
A ‘Sweat’ app spokeswoman said the business had been “repositioned and right-sized” to cater to customers who were increasingly combining home workouts with in-gym exercise.
“A downturn in trading performance has resulted in a financial forecast below expectations,” she said adding that the business is focused on broadening the platform’s appeal, “providing increasing holistic health, nutrition and wellbeing offerings, and is confident of being well placed for future growth following recent tough but necessary decisions”.
The Greek Australian fitness queen started her online training app Sweat, originally named Bikini Body Guide back in 2015 alongside her ex partner Toby Pearce.
Itsines, 31, and Pearce, 30, both personal trainers, shot to fame after the program evolved to ‘Sweat’ offering quick and easy-to-do but effective home workouts for women to do at home or the gym.
The duo split in 2020 but remained business partners until Pearce’s departure from the business in February this year.
Since 2015, with Kayla Itsines as the face of the app the business kept growing, reaching its peak during the two years of lockdowns and restrictions.
The financial statements reveal iFIT has, to date, paid Sweat founders Itsines and Pearce $119.6m to take over the business, The Advertiser reported, through a mix of cash, shares and incentive-based payments last June.
A Goodwill of $81.4m was recognised at the time of purchase, when the home exercise boom was flourishing between 2020 and 2021.
However, ‘Sweat’ reported an $85m loss in the 11 months to May, due largely to the $80.6m impairment charge reflecting the revised financial projections for the Australian business.
The company did not confirm or deny the exact numbers involved in the lay-offs, with a Sweat spokesperson stating that they were still going through a consultation process with employees as a $80m write-down sent the business into a deep loss in its first year under foreign ownership.
“The impairment loss on goodwill … relates to the underperformance of the company compared to the initial expectation of the business from acquisition,” iFIT said in a financial statement.
“The decrease in revenue is due to increased competition in the market and follows the same trend as the major players in the digital fitness industry, where declining sales meant costs needed to be reduced to manage the negative results.
“Sweat, along with others in the digital fitness industry, is experiencing headwinds of reduced customer demand and increased competition from bricks and mortar fitness, along with many new entrants into the digital fitness market as pandemic restrictions eased across the financial year.”