INDUSTRY VIEWS
LEISURE DB
INVESTOR PERSPECTIVE KEY CRITERIA FOR BOUTIQUE FITNESS INVESTMENT
Through innovation and best-in-class entrepreneurship, boutiques have influenced the broader health and fitness market and changed the way we consume leisure. Today, Barclays has the privilege to support operators through our payments platform business and with our balance sheet. As boutiques navigate the current climate, we expect to see more opportunity to support the evolution of this space. Today’s economic outlook will require all consumer-facing industries to adapt. Many of the boutique market leaders have not previously operated in a low growth/ high interest rate environment, which will lead to assumptions being tested, changes in strategy and heightened competition. To support growth, whether through M&A or material capex, there are core fundamentals we always consider. These are even more pronounced today due to the current climate. Stakeholder alignment is important, whether we’re working with management or a founder, with transparency around the drivers for exit, what targets need to be met and who is incentivised to make it happen. Banks must also spend time with the equity holder to ensure all stakeholders are on the same page. Capital allocation policy will be scrutinised, whether in relation to a new site roll-out or a technology investment as part of the end-user experience. The rationale and return for all capital investment should be clear and well-justified. We expect technology to drive positive outcomes; from boosting customer retention to optimising business functions, we have seen excellent use cases. Whether it’s deployed to drive revenue or manage costs, technology should be used efficiently. It should never be about technology for the sake of technology. A robust financial plan is crucial – one that accounts for the downside while clearly articulating delivery of the underlying plan. Financial partners will focus on underlying cash assumptions, and while revenue growth remains key, margin expansion and cashflow will be opined on more than ever. A final observation is that boutiques are boutiques for a reason. Scale is not always the solution. Focusing on the core concept and providing best-in-class client experience will determine the expansion of the sector and who we, as financial partners, work with.
As boutiques navigate the current climate, we expect to see more opportunity to support the evolution of this space.
JOSHUA NEISH Head of Hospitality & Leisure, Barclays Corporate Banking
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LONDON BOUTIQUE STUDIO REPORT 2023
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