(Bloomberg) -- Flywheel Sports Inc. is shutting down more than a quarter of its cycling locations, the latest sign that boutique fitness studios are struggling to keep up with home exercise products like those from Peloton Interactive Inc.
New York-based Flywheel said it will shutter 11 of its 42 locations. All four studios in Los Angeles will close this month, in addition to those in Alpharetta, Georgia; Austin, Texas; North Miami, Florida; and the San Francisco area locations in Sunnyvale and Walnut Creek, California, said a Flywheel spokesman. “We decided to take a look at our national footprint and close studios that were under-performing,” he said. “All riders impacted will be offered a full refund.”
Venture capitalists had raced to fund specialty fitness companies several years ago, but the craze is fading. ClassPass Inc., which sells access to a variety of boutique workout studios and is backed by more than $200 million in funding, cut its stock price two years ago. SoulCycle, the most popular spin chain, is currently sweating a boycott by some customers over a fundraiser for President Donald Trump hosted by the chairman of SoulCycle’s parent company.
Rumble Fitness LLC, a boxing gym based in New York backed by celebrities like Justin Bieber, has been trying to raise funds for months. It has yet to close the round due to lack of interest from VCs at a proposed valuation of as much as $500 million, said people familiar with the discussions, who asked not to be identified because the talks were private. A spokeswoman for Rumble didn’t immediately respond to a request for comment.
Meanwhile, Peloton has amassed more than 500,000 subscribers for its fitness apps and exercise products. Its most popular is a stationary bicycle with a built-in tablet showing live instruction videos. The company said in June that it had submitted paperwork confidentially to U.S. regulators for an initial public offering. People familiar with the plans have said Peloton is seeking a valuation of $8 billion to $10 billion, which would be about twice the size of its last private funding.
A founder of SoulCycle started Flywheel about a decade ago, and the company expanded to major cities across the U.S. But it ran into financial trouble, and control of Flywheel was seized in April by its lender, Kennedy Lewis Investment Management LLC. The investment firm had been seeking a buyer for the business. In the meantime, the lender said it was focused on selling Flywheel bikes for customers to use at home.
For the coming closures, Flywheel informed instructors this week, and emails to customers went out on Thursday. “It’s taken me a min to process the news,” Steven Goldsmith, a Flywheel instructor in Los Angeles who goes by the Instagram name “stevendurance,” wrote on the photo-sharing app. “I’m heartbroken!”
(Updates with San Francisco area locations in the second paragraph. Flywheel corrected the number of studios being closed in an earlier version.)
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