Picture source @Visual China
text | Qingcheng Finance, author | Tianchen, editor | Liuzi
One stock price continues to fall, and one incubated sub-brand is accelerating its sinking. As 2023 is about to come to an end, two emerging fitness brands—— keep and Leke have gone in different directions .
As of press time, the price per share of keep has dropped from the issue price of 28.92 Hong Kong dollars per share to 16.22 Hong Kong dollars per share of , and the market value has dropped from HK$15.2 billion at the time of listing to HK$8.526 billion. Since keep's listing on July 12 this year, its stock price has fallen sharply after a brief rise. In the first half of this year, keep’s revenue declined and continued to suffer losses. Both its average monthly active users and average monthly subscription members declined. Perhaps it is this performance that is why investors continue to be bearish.
In sharp contrast, Leke is expanding with great fanfare. On November 26, Leke opened an investment fair for its new brand "Lightning Panda", aiming to expand into the sinking market. Since announcing in July this year the goal of “ entering 100 cities in the next five years and opening 10,000 stores”, Leke has launched a multi-brand matrix layout model.
Since the beginning of this year, traditional fitness brands such as One Trillion Wade and Comfort Fort have been in trouble of going bankrupt and closing stores. However, the listing of Keep and Loco’s Ten Thousand Stores plan have made emerging fitness brands popular in the market. Just when I thought that the fitness industry would lead the new trend with these two companies, who would have thought that there are changes now. Maybe 2024 will be the watershed .
"keep is no longer popular as "
html On July 12, keep was listed on the Hong Kong Stock Exchange. The opening price was HK$28.92 per share. It once exceeded HK$30 that day and finally closed at HK$29, with a market value of HK$15.244 billion. html On August 22, keep’s share price reached a maximum of HK$42.4, which was also the highest point since its listing, and it began to fall thereafter. As of press time, keep’s share price is HK$16.22, and its market value has dropped to HK$8.526 billion.
* comes from the Internet
It is worth noting that on December 4, the list of Hong Kong Stock Connect targets was updated, and keep was among them. This was originally good news, but the market reaction was that the stock was sold off in large quantities, and keep’s stock price plummeted by more than 100% that day. 27%, and fell to HK$14.02 in the next few days, a record low.
It is reported that keep has become popular with its free courses and social functions since it launched in early 2015. Up to now, keep has completed a total of 9 rounds of financing , with investors including ggv Jiyuan Capital, Wuyuan Capital, Tencent, Softbank, Hillhouse, Bai and other well-known investment institutions.
But the road to listing is not smooth. In 2021, there was news that Keep was going to be listed in the United States, but then it turned to the Hong Kong Stock Exchange and submitted its forms twice in February and September 2022, but failed to pass. On March 28 this year, keep updated its prospectus and submitted the form again. Finally, it passed the hearing in June and was successfully listed on July 12.
As of now, keep has not yet profited from . According to the prospectus, from 2019 to 2022, keep’s revenue was 663 million yuan, 1.107 billion yuan, 1.620 billion yuan, and 2.21 billion yuan respectively; the adjusted net losses were 367 million yuan, 106 million yuan, 827 million yuan, and 667 million yuan respectively. billion. In the first half of this year,
kept but still failed to make a profit. It only narrowed its losses by increasing high-quality revenue and gross profit margin. According to keep’s first financial report after listing, in the first half of this year, its total revenue was 985 million yuan, a year-on-year decrease of 2.7%; its adjusted net loss was 223 million yuan, a year-on-year decrease of 29.7%. In terms of
's three major businesses, 's own brand sports products revenue was 466 million yuan, a year-on-year decrease of 9.5%, mainly due to a decrease in product sales. membership subscription and online paid content revenue was 449 million yuan, a year-on-year increase of 10%, mainly due to the increase in revenue generated from virtual sports events. advertising and other revenue was 69.4 million yuan, a year-on-year decrease of 21.4%, mainly due to the negative impact of the epidemic on keep advertisers. In terms of
users, the average monthly active users of were 29.549 million, a year-on-year decrease of 21.6%; the average reading subscription members were 3.017 million, a year-on-year decrease of 17.7%. Keep said these two decreases were due to a temporary reduction in fitness activities in early 2023 due to the surge in new crown cases in various places in late 2022 and early 2023.At the same time, in the first half of 2022, epidemic-related restrictions restricted outdoor activities, causing keep's monthly active members and subscription members to reach abnormally high levels, thus creating a high base effect. However, this impact has begun to weaken, and the average monthly active members and average reading subscription members in July 2023 have dropped to about 90% of the same period in 2022. However, in the first half of this year, the membership penetration rate of and increased from 39.7% in the same period of 2022 to 10.2% . The average monthly income per monthly active user was 5.6 yuan, a year-on-year increase of 24.1%.
keep pointed out in the financial report that looking forward to the uncertainty of the external environment, optimizing operations, cost management and ensuring liquidity will remain the company's short-term key efforts to minimize the negative impact of these uncertainties on the overall business fundamentals. Influence. We will continue to invest in immersive, exclusive, professional content and interactive experiences, develop and apply new technologies and intelligent functions, empower the platform, and increase user participation. It can be seen from
that the future focus of keep is still online .
In fact, keep also tried to go offline and opened keepland stores, but many stores were closed during the epidemic. If you don’t succeed offline, you can only rely on online. However, as the epidemic has passed, the number of people exercising at home has begun to decrease, and the good days of keep seem to have come to an end. Zhang Shule, a commentator on the
industry, said that such profits and losses are not worth boasting about for a sports technology company that wants to cover all aspects of users’ “food, clothing, exercise”. Keep's moat is disappearing, With the success of short video platform fitness anchors, keep's life has become more difficult . Free fitness live broadcasts are naturally more attractive than paid keep memberships. When the total user time is constant, the monthly active users of Keep will naturally decrease. This trend may be faster in the future and accelerate the decline of Keep. Jiang Han, a senior researcher at
Pangu Think Tank, also pointed out that the continued decline in stock prices can be seen as the market is worried about the future profitability of keep . The decline in keep's own sports products and advertising revenue may be due to various factors such as intensified market competition, changes in user demand, and product quality issues. For keep, it must not only consider how to strengthen its own technological innovation and service improvement to increase user stickiness, but also develop new sources of revenue to cope with competition and market changes.
" Leke is radically expanding "
is different from keep's sluggish growth, but Leke is expanding aggressively.
On November 26, Leke opened an investment fair for the new brand "Lightning Panda" . It is reported that Lightning Panda is targeting the sinking market. Compared with Leke stores, Lightning Panda is larger in area, has an additional shower area, and is expanding through a single-person, single-city strategy for its partners.
Lightning Panda is a fitness brand specially launched by Leke for the sinking market, mainly targeting more than 300 prefecture-level cities in China. According to the vision of Xia Dong, co-founder and co-CEO of Leke, Lightning Panda will open 2000-4000 stores in the sinking market in the future. Xia Dong said that the Chinese market is huge. Even if LeKe opens to 10,000 stores, it will only account for 15% of the market.
Leke was founded in in 2015. It is a "product" of the same era as Keep, but unlike Keep, which is mainly online, although Leke is also known as an Internet fitness brand, has always focused on offline , and it is also facing the epidemic. Growth was achieved during the period. As an offline store,
can still achieve growth during the epidemic. LeKe focuses on features such as small area, monthly payment system, 24 hours, no promotion, franchise, and multiple brands, which makes it essentially different from traditional fitness.
In fact, Leke announced the Lightning Panda brand in July this year, along with the yoga brand "yogapod". Up to now, LeKe has incubated many brands such as LeKe Fitness, feelingme LeKe Private Training Center, yogapod, Lightning Panda, and fittribe.
Also in July this year, Leke announced the goal of "entering 100 cities and opening 10,000 stores in the next five years." As of now, Leke has nearly 1,400 stores in 24 cities across the country. In addition, feelingme also realized the scale of the chain last year, and now has a presence in 10 cities with more than 180 stores.
According to the China Business Daily, regarding the sinking market, Wang Pengzhi, partner of Leke Sports and head of Lightning Panda operations, said that it is relatively rare for the number of chain gyms to exceed 5 in emerging markets. The population size and per capita GDP are the reasons for Leke to enter emerging markets. Two main considerations for the market. Lexing has few brands to compete with in emerging markets in the fitness industry, and will focus on observing how emerging consumer brands such as Luckin and Mixue Bingcheng carry out urban layout.
It is reported that the Lightning Panda store area is larger than that of Leke. Lightning Panda is 280-350 square meters , while Leke is 250-300 square meters. However, due to relatively low rent, fire protection and other expenses in the sinking market, the cost of opening a Lightning Panda store is about 10%-15% lower than that of Leke. This also means that Lightning Panda will carry more and of the "Hundred Cities and Ten Thousand Stores" plan.
However, the pricing in the sinking market, the shortage of coaches and the uneven level of are the problems facing Lightning Panda . In this regard, Lightning Panda adopts the city partner model, that is, one person per city, one city, one strategy. The membership fee is different in each city, and the Lightning Panda card can only be used in a single city. In the same city, Lightning Panda coaches can be fully dispatched between multiple stores. Lightning Panda’s charging mechanism adopts a membership fee system. You must submit a membership fee before enjoying monthly gym memberships, quarterly memberships or personal training services.
Jiang Han pointed out that Leke’s multi-brand layout will undoubtedly be of great help in expanding market share. However, in the sinking market of Nuoda, different groups of people have very different fitness needs and price sensitivities. This will bring huge difficulties to Leke. It will take time to test how to adapt to different markets.
" market enters a watershed "
Since this year, the fitness market has entered a period of reshuffle, and the market has become polarized.
In January this year, Jinan Zhongjian Fitness went viral, and its founder and legal representative Fu Weixin lost contact; in June, One Trillion Weide announced its closure; at the end of October, Chengdu Welsh Gym closed its stores; in December, many Comfort Fort fitness stores in Shanghai suddenly announced their closures . In addition to gyms, many yoga brands including Fanyin Yoga, Fanyu Yoga, and Rita Yoga have also closed their stores this year. For a time, the entire traditional fitness industry was wailing about and .
According to the "2022 China Fitness Industry Data Report" jointly released by the School of Economics and Management of Shanghai University of Sport and others, due to the impact of the epidemic, the national fitness market will be approximately 255.9 billion yuan in 2022, a 6.64% decrease from 274.1 billion yuan in 2021. The total number of commercial gym closures nationwide in 2022 is approximately 9,751, with a closure rate of 10.39%. Among the total number of closures, fitness clubs accounted for nearly 30%, and fitness studios accounted for more than 70%. In 2022, the average growth rate of fitness clubs in mainstream cities (including first-tier and new first-tier cities) will be 3.00%, the closure rate will be 13.30%, and the net growth rate will be -10.34%. The average growth rate of fitness studios in mainstream cities in 2022 will be 3.52%, and the closure rate will be 16.01%.
Despite the poor industry background, there are still fitness venues seizing the opportunity to expand. But the proportion of coaches dropped from 45.34% in 2021 to 44.65% in 2022, while the proportion of cross-border investors in the non-fitness industry has increased compared with 2021.
This reflects that market competition is more severe , and fitness coaches who want to start a business are slightly cautious. At the same time, the epidemic has accelerated the reshuffle of the industry, and store operators with poor management have no choice but to withdraw and sell to peers or cross-border investors. The repeated epidemics have also exacerbated the uncertainty in the fitness industry.
Entering 2023, the fitness industry will usher in a rapid rebound, and the industry will usher in a new round of development cycle.
According to iiMedia Consulting data, the market size of China’s fitness industry has continued to grow in recent years. The market size will reach 377.1 billion yuan in 2021, and it is expected that the market size will exceed 500 billion yuan in 2023. The
market is growing on the one hand, and shuffling on the other. Traditional fitness brands are gradually being replaced by emerging fitness brands such as keep and Lex. But in the coming 2024, will the online mode represented by keep be the main one, or the offline mode represented by Leke?
In this regard, Jiang Han pointed out that the performance difference between keep and Leke is related to their respective business models, brand positioning, market strategies and other factors.But no matter what, the future development direction of the market will pay more attention to aspects such as personalization, intelligence, and socialization. Both keep and Lex need continuous optimization and innovation to adapt to changes in consumer demand and market competition.
Lai Yang, member of the Expert Committee of the China Business Federation and executive vice president of the Beijing Business Economics Association, said that whether online or offline, demand is definitely growing, and the key lies in the brand's profit model. Although keep has a large number of free resources that consumers are willing to use, their willingness to pay for the functions is not necessarily strong, so keep may not be able to gain much revenue. Secondly, the products sold by keep online lack uniqueness and can also be purchased through other channels, so it is difficult for this part of the revenue to continue to grow. Keep’s offline stores have encountered the same sustainability issues as traditional gyms, so store closures are inevitable. The franchise model of LeChu is a double-edged sword. With its scale, there are management and control risks. Therefore, whether it can continue to make profits in the future still requires more research and exploration. At least from the current fitness industry, there is no relatively successful profit model sample.
Facing the upcoming 2024, it remains to be seen whether keep and Leke will show off their talents or squeeze each other out of the poker table.
