In January of 2022, Birmingham, England-based Gymshark debuted its first U.S.-focused ad campaign as part of a larger strategy to expand its North American business. Twelve months later, in January of 2023, Gymshark laid off 65 employees from its Denver office in a restructuring of its U.S. operations.
The problem wasn’t demand, according to Gymshark’s chief brand officer, Noel Mack. When the then-11-year-old company held its first American pop-up shop in NYC’s SoHo neighborhood in 2017, there was a line that stretched along Mercer Street all the way down to Canal, he said. Gymshark reached $200 million in annual U.S. sales before hiring a single employee based in the U.S., and North America is still the second-largest market for the brand outside of the U.K.
Instead, Mack said Gymshark’s mistake was assuming it needed to model itself off of athleticwear giants like Nike or Adidas, with massive offices around the world.
“We lost some of our authenticity with our customer,” he said. “We tried to act like a big business too soon, when we could already get hundreds of millions in sales without a single American employee. I’m glad we got the restructure out of the way early – even though it wasn’t an easy decision – so we can focus on investing in the U.S. market in other ways.”
For now, Mack said Gymshark hasn’t given up on the U.S. While the company just opened its first store in October — a large flagship on Regent Street in London — Mack said a U.S. flagship is being considered for the future. In the meantime, U.S. events — like one coming up in L.A. that expects to bring in 50,000 guests — will be a priority. Continued marketing and e-commerce sales in the U.S. will also remain a focus. Gymshark still has a small U.S. team doing good work at driving business there.
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Gymshark has significantly grown in the 10 years since its founding, starting in the bedroom of founder Ben Francis in 2012 and being valued at more than $1.3 billion in 2022. It now ships to 180 countries and has 5 million followers on Instagram. Unlike many athletic brands, Gymshark has mostly eschewed professional athlete partnerships and instead focused on working with fitness influencers like Nikki Blackketter and Lex Griffin.
But in recent months, that growth has been tempered by higher costs. On Monday, the brand reported in its annual financial filings that its revenue increased 21% in 2022 to more than $600 million, compared to $502 million in 2021. However, its profits have shrunk. Profits in 2021 were around $56 million in 2021, but down to $34 million in 2022.
Mack said this is partially due to the rising cost of doing business. Raw materials, labor and shipping costs have all increased. Gymshark has not yet raised its prices, though it is weighing the possibility. But beyond that, he said it’s a reflection of Gymshark’s investment strategy.
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“Our philosophy is that you can sit and beat yourself up over situations like this or you can try to make something out of it,” Mack said. “When everyone else is holding onto their cash, we’ve increased our spending. Our costs went up, and we signed a 10-year lease on one of the most prestigious store locations in the world, [the Regent Street flagship]. The fact that now we’re seeing double-digit [revenue] growth is proof that it’s working for us.”
Activewear as a category has boomed in the pandemic years, and it continues to swell. The women’s side of activewear alone is projected to be a $40 billion global market by 2027.
“We’ve seen the lifestyle space grow as athleisure became a huge asset for apparel brands in the fashion industry,” said Dave Sharma, co-founder and CEO of the virtual fit tech company Perfitly who has worked with brands like To Act and Otero to launch athleisure apparel. He noted the number of brands, including Draper James and LoveShackFancy, that have launched activewear in the last year.
But Mack said consumers can sniff out inauthentic cash-ins a mile away.
“I say that because there are a million DTC or e-comm businesses cashing in on athleticwear, trying to get in on it,” Mack said. “A lot of brands try to be Gymshark. But it’s not as easy as just throwing out a tracksuit. Even Beyonce just backed out of an athleisure deal with Adidas because it wasn’t selling. There aren’t a lot of businesses like ours that can say they’ve been growing strong every year for 10 years and are profitable. The customers show us that there’s still a lot more room for us to grow.”
