XPOF: Strategic Review Looms as Same-Store Sales Decline Deepens
The boutique fitness franchisor cut guidance amid a merchandise misstep and persistent top-of-funnel pressure, while exploring strategic alternatives.
XPOF · Earnings Call · 2026-08-06
The Same-Store Sales Squeeze
Xponential Fitness entered Q2 2026 with a familiar problem — and this time, it got worse. Same-store sales fell 6.8% overall and 5% at Club Pilates, the flagship brand that dominates unit growth. CEO Mike Nuzzo was blunt: “Our Q2 same-store studio sales were down 6.8% overall and down 5% for Club Pilates, remaining below our expectations and modestly weaker than Q1 trends, with the primary impact coming from top-of-funnel pressure.” — Michael Nuzzo, Chief Executive Officer · 2026-08-06 That top-of-funnel pressure is nothing new — it has been the company's refrain for over a year, and this quarter it is explicitly tied to Organic lead generation. Paid media is compensating, but the organic engine is still sputtering. Management points to strong member retention as a counterweight — member retention actually improved 28 basis points year-over-year. But retention cannot offset acquisition slippage when the installed base is already at capacity. The strategic response is to keep opening studios, arguing that unit growth, not same-store comps, is the true value driver. CFO Robert Julian defended this logic in Q&A: “It's not unimportant, but I would say that what is putting pressure on our P&L right now is actually more on the equipment sales and the merchandise revenue.” — Robert Julian, Interim Chief Financial Officer · 2026-08-06 That admission frames the quarter's real issue — not just comps, but a pair of revenue lines that were supposed to cushion the slowdown.Merchandise Misstep and the Marketing Bridge
Merchandise revenue collapsed $5.1 million year-over-year. Roughly $3.9 million of that is the accounting shift to the outsourced model — but the company also admitted execution failures with the new vendor. Just six months ago, CFO John Meloun had touted the deal as a near-pure margin play: “So what was traditionally, I would say, a retail business that operated breakeven or slightly at a loss is now going to be virtually 100% margin.” — John Meloun, Chief Financial Officer · 2026-02-26 Instead, the transition has become a drag. Management is working through “process fixes,” but the pace of improvement has been slower than hoped — a theme that echoes the broader guidance cut. To bridge the top-of-funnel gap, XPOF has leaned into paid media, which delivered more leads but not enough to offset the organic slide. The company's keyword trajectory shows Merchandise revenue has been a recurring pain point across several quarters, and this quarter it re-emerged as a headline driver of the EBITDA miss. Meanwhile, adjusted EBITDA came in at $21.9 million, down 22% year-over-year, and full-year guidance was slashed to $91–97 million (from a previous ~$105 million range). Total revenue guidance fell to $250–260 million, with system-wide sales trimmed to $1.70–1.75 billion.Strategic Alternatives and the Path Forward
The most consequential development is the strategic alternatives review, announced in April and still ongoing. The board, aided by Jefferies, is evaluating a sale, merger, or other transaction. Nuzzo offered little beyond process:This overhang, combined with the comp weakness, has driven the stock to a 31.7% drawdown over the past 90 days — a name in motion with no clear catalyst yet. Still, management is not standing still. They signed a 117-studio pact with the largest Club Pilates franchisee, net unit growth reached 28 year-to-date, and they are betting on digital redesigns, AI-driven SEO, and a Starbucks protein-coffee collaboration to revive organic demand. A new president, Danielle Parra, brings franchise-ops experience. These are all constructive, but the company has been in “fix” mode for several quarters, and the evidence of sustained improvement remains elusive.The process may include a sale of the company, a merger, or another strategic or financial transaction. The process is ongoing, we do not intend to comment further until it has concluded.