Examining the State of Curves

curves-pratt-400.gif Curves has received a lot of good publicity over the past few months. Along with those good vibes, however, have come reports of more Curves closures, both in the United States and abroad, as well as a Wall Street Journal report detailing the company's decline.

In April, Curves founders Gary and Diane Heavin were featured prominently in ABC's "Secret Millionaire" reality TV show. Then in July, CNBC featured on its website a slideshow of companies, including Curves, in a piece titled "10 Ideas That Made $100 Million."

CNBC reported that the women-only circuit club company generated system-wide revenue of $1 billion in 2010, which would make Curves one of the top five companies in our industry. Curves, which has traditionally not submitted revenue figures to Club Industry for our Top 100 Clubs list, confirmed the $1 billion figure to us, although in the ABC show, Gary Heavin told viewers that Curves franchisees and the Heavins generated $2 billion last year. Regardless, the CNBC report caught the eye of CNN, giving Curves more exposure.

Around the time of the CNBC report, two Curves closed in Lakeland, FL. In a Lakeland Ledger report, the newspaper cited a 2010 Wall Street Journal report which stated that Curves had 5,208 clubs at the end of 2009, down from 7,748 clubs at the beginning of 2007. More than 1,000 Curves clubs closed in 2009, the newspaper reported.

In August, the Wall Street Journal examined Curves even further, reporting that the company lost 833 clubs in 2010—16 percent of the company's domestic portfolio. It went on to report that Curves has about 4,000 clubs in the United States, half of what it had in 2005. The report also details some disagreements between franchisees and management, which Heavin addresses in the story.

Specific revenue figures for Curves were outlined in the August Wall Street Journal report. Revenue for Curves fell 10 percent last year from $84.1 million in 2009 to $75.6 million in 2010, the newspaper reported. Net income in 2010 was $15.6 million, down from $16.4 million the year before. The newspaper also reported that Curves plans to open less than 90 franchises in the United States this year and is concentrating on growing internationally.

Curves, which has said it has almost 10,000 locations worldwide and more than 4 million members, also has had clubs close internationally. Earlier this month, two clubs closed in Pretoria, South Africa, after the owners reportedly filed for bankruptcy. [Update: Curves says it currently has more than 8,000 locations worldwide and has "millions of members," adding it has "helped more than 4 million women over the years."]

Curves President Mike Raymond responded to our request seeking comment about the closures in Lakeland. Raymond's response from July also could apply to today.

"Curves has thousands of franchisees that do things the Curves way and are very successful—all around the world," Raymond said in a statement. "While it's true a number of clubs have closed in the U.S., many did so after enjoying a very successful return on their investment. We made it easy for them to decide to leave by announcing a policy that removed any penalties for closing. Even with the club closures, Curves is still the largest fitness franchise in the world."

Raymond went on to say that many Curves clubs that are sold get turned around by energetic new owners.

"The elements that made us so successful five or 10 years ago are as relevant today as they were then," Raymond said. "Women still want a convenient, accessible fitness solution that is offered in a supportive, caring environment. As a company, we are profitable, have no debt and remain committed to our mission of strengthening women. We have enormous opportunities ahead in China and India, which are virtually untapped."

The company will host national conventions for its franchisees later this fall, at which time Curves is expected to announce a "reinvention" of the company. Heavin told the Wall Street Journal that the reinvention will include a new weight-loss program, improved training for franchisees and their staffs, and an online "university" to teach nutrition.

Given the ongoing reports of club closures and declining revenue, it will be interesting to see how successful these initiatives will be for Curves.

Read more on: