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FIT TECH News

Tonal chases profits with 35% cut in workforce

By
Tonal has announced that it is reducing its workforce by 35 per cent
The move is part of a drive to achieve sustainable growth and profitability
In an internal memo, CEO Aly Orady said Tonal was built for a “hyper growth trajectory” but that needed to change in light of supply chain issues and economic contraction
Around 245 employees will lose their jobs – they will receive eight weeks’ pay and healthcare until September
Our costs, growth, and investment levels were shaped by and built for a hyper-growth trajectory. We owe our members and our shareholders, including past and current employees, to be here for the long haul beyond the present economic downturn, Aly Orady, CEO of Tonal
Credit: Tonal
Our costs, growth, and investment levels were shaped by and built for a hyper-growth trajectory. We owe our members and our shareholders, including past and current employees, to be here for the long haul beyond the present economic downturn
– Aly Orady, CEO of Tonal

Tonal, the at-home strength-training startup backed by Amazon and athletes such as Serena Williams, Maria Sharapova and Mike Tyson, has announced a restructuring, reducing its workforce by 35 per cent as part of a move to sustainable growth and profit.

The company said that while sales have continued to grow, so have costs, "particularly in light of the macroeconomic climate and global supply chain challenges”. The decision was cited as “responsible”.

Tonal is on record as employing around 700 people, suggesting there will be around 245 job cuts – staff are expected to receive severance packages and extended healthcare.

In March 2021 Tonal raised US$250m in Series E funding from Dragoneer, Cobalt Capital, L. Catterton and Sapphire Venture. During the previous year – the first twelve months of the pandemic – Tonal’s sales had multiplied eight times, the company announced a partnership with Nordstrom across 40 locations and it had received finance from its athlete investors and ambassadors.

At the time, Maria Sharapova said: “As an investor, I’ve always been drawn to companies that are developing a new approach to their category, and Tonal’s focus on AI and technology brings added accountability and a unique sense of motivation that I haven't yet seen in the space.”

In an internal memo CEO Aly Orady expressed his regret to the staff telling them he was “truly sorry” and that the decision was in “no way a reflection” of their work or contributions.

“It is heartbreaking to confront the reality that we must say goodbye to team members full of strength and passion,” he wrote. “For those impacted by today’s news, you have made a permanent imprint on Tonal and on the colleagues around you.”

Orady went on to explain how the decision had come about, saying. “Despite an economic landscape shaped by a pandemic, supply chain challenges and global instability, the past two years have been a period of rapid growth for Tonal.

“As our business scaled, we grew our teams rapidly to keep up with demand and competition. Our growth was supported by outside investors with large sums of capital, while those same global challenges were causing our costs to rise.

“These collective challenges accumulated in the macroeconomic environment. The capital markets began to deteriorate, triggering a new chain of events, including record-level inflation, rising interest rates, and now a potential recession – all of which are forcing most companies to re-evaluate their businesses.

“When it came down to it, we had to face these realities: to make it through what’s ahead, we must prioritise becoming a self-sustaining and profitable business. Becoming self-sustaining requires us to scale back significantly, both operationally and in our headcount.

“Our costs, growth, and investment levels were shaped by and built for a hyper-growth trajectory. We owe our members and our shareholders, including past and current employees, to be here for the long haul beyond the present economic downturn.”

Orady said that every possible option was evaluated to try and avoid job losses. “Given the rapid market deterioration, we knew we had a responsibility to act decisively for you and our members,” he continued.

“We kicked off a process to create a simplified, focused business strategy in line with a more sustainable cost model,” he wrote. “We reduced our strategic initiatives and assessed how each team mapped to each initiative, determining the right size and shape for each function. Then, we conducted a comprehensive review of each team, weighing decisions based on core competencies and how they mapped to our needs moving forward.

“None of these decisions happened without careful consideration. None of them was easy.”

Orady confirmed that in a bid to make the process as easy as possible that all affected employees would receive at least eight weeks of continued pay, while healthcare coverage would continue until the end of September.

“Please know this decision was part of becoming leaner as a business to tackle upcoming economic challenges, and ensure Tonal has a strong future ahead,” he concluded.

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In just over two years, the fitness industry has experienced major disruptions to gyms, a boom in at-home fitness and the return of in-person workouts.
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Tonal chases profits with 35% cut in workforce

By
Tonal has announced that it is reducing its workforce by 35 per cent
The move is part of a drive to achieve sustainable growth and profitability
In an internal memo, CEO Aly Orady said Tonal was built for a “hyper growth trajectory” but that needed to change in light of supply chain issues and economic contraction
Around 245 employees will lose their jobs – they will receive eight weeks’ pay and healthcare until September
Our costs, growth, and investment levels were shaped by and built for a hyper-growth trajectory. We owe our members and our shareholders, including past and current employees, to be here for the long haul beyond the present economic downturn, Aly Orady, CEO of Tonal
Credit: Tonal
Our costs, growth, and investment levels were shaped by and built for a hyper-growth trajectory. We owe our members and our shareholders, including past and current employees, to be here for the long haul beyond the present economic downturn
– Aly Orady, CEO of Tonal

Tonal, the at-home strength-training startup backed by Amazon and athletes such as Serena Williams, Maria Sharapova and Mike Tyson, has announced a restructuring, reducing its workforce by 35 per cent as part of a move to sustainable growth and profit.

The company said that while sales have continued to grow, so have costs, "particularly in light of the macroeconomic climate and global supply chain challenges”. The decision was cited as “responsible”.

Tonal is on record as employing around 700 people, suggesting there will be around 245 job cuts – staff are expected to receive severance packages and extended healthcare.

In March 2021 Tonal raised US$250m in Series E funding from Dragoneer, Cobalt Capital, L. Catterton and Sapphire Venture. During the previous year – the first twelve months of the pandemic – Tonal’s sales had multiplied eight times, the company announced a partnership with Nordstrom across 40 locations and it had received finance from its athlete investors and ambassadors.

At the time, Maria Sharapova said: “As an investor, I’ve always been drawn to companies that are developing a new approach to their category, and Tonal’s focus on AI and technology brings added accountability and a unique sense of motivation that I haven't yet seen in the space.”

In an internal memo CEO Aly Orady expressed his regret to the staff telling them he was “truly sorry” and that the decision was in “no way a reflection” of their work or contributions.

“It is heartbreaking to confront the reality that we must say goodbye to team members full of strength and passion,” he wrote. “For those impacted by today’s news, you have made a permanent imprint on Tonal and on the colleagues around you.”

Orady went on to explain how the decision had come about, saying. “Despite an economic landscape shaped by a pandemic, supply chain challenges and global instability, the past two years have been a period of rapid growth for Tonal.

“As our business scaled, we grew our teams rapidly to keep up with demand and competition. Our growth was supported by outside investors with large sums of capital, while those same global challenges were causing our costs to rise.

“These collective challenges accumulated in the macroeconomic environment. The capital markets began to deteriorate, triggering a new chain of events, including record-level inflation, rising interest rates, and now a potential recession – all of which are forcing most companies to re-evaluate their businesses.

“When it came down to it, we had to face these realities: to make it through what’s ahead, we must prioritise becoming a self-sustaining and profitable business. Becoming self-sustaining requires us to scale back significantly, both operationally and in our headcount.

“Our costs, growth, and investment levels were shaped by and built for a hyper-growth trajectory. We owe our members and our shareholders, including past and current employees, to be here for the long haul beyond the present economic downturn.”

Orady said that every possible option was evaluated to try and avoid job losses. “Given the rapid market deterioration, we knew we had a responsibility to act decisively for you and our members,” he continued.

“We kicked off a process to create a simplified, focused business strategy in line with a more sustainable cost model,” he wrote. “We reduced our strategic initiatives and assessed how each team mapped to each initiative, determining the right size and shape for each function. Then, we conducted a comprehensive review of each team, weighing decisions based on core competencies and how they mapped to our needs moving forward.

“None of these decisions happened without careful consideration. None of them was easy.”

Orady confirmed that in a bid to make the process as easy as possible that all affected employees would receive at least eight weeks of continued pay, while healthcare coverage would continue until the end of September.

“Please know this decision was part of becoming leaner as a business to tackle upcoming economic challenges, and ensure Tonal has a strong future ahead,” he concluded.

More fit tech news
Peloton is set to axe around 800 jobs, increase the price of its equipment and close some of its retail ...
At-home rower maker Hydrow is one of the latest connected-fitness companies to announce staff cuts. The tech company which won ...
Peter Roberts, former CEO and founder of Pure Gym, has invested in Another Round, a personal training app which utilises ...
Ohm Fitness, a new franchised studio concept, has opened its first location in Scottsdale, Arizona. Delivering small group workouts using ...
A solution dubbed the 'world’s highest quality motion capture system' could help sports scientists, personal trainers and other professionals working ...
Global gym software company ABC Fitness Solutions has entered an agreement to acquire boutique fitness management platform Glofox. The merger ...
Younger men at independent gyms are more likely than any other consumer group to accept increases in their membership fees, ...
More HCM news
Mindbody has announced that Fritz Lanman will become the company’s new CEO from 3 September 2022. He will succeed Josh ...
Nowatch, a new contender in the expanding biometric fitness tracker market has developed a wearable device, in partnership with Philips, ...
Fibr, a new social platform connecting fitness professionals with each other and potential employers has launched. Created by a team ...
Amazon has acquired primary healthcare organisation One Medical in a US$3.9bn deal that will see it moving further into the ...
PROMOTION
EGYM has been pioneering the connected gym floor for more than a decade, partnering with operators and other third-party integrations, ...
Scandinavian fitness chain SATS has reported Q2 results showing a 53 per cent increase in revenue to NOK 1,022m (£85,591,015). ...
Strava and Oura have teamed up to provide users with a more integrated service between the two systems. Oura members ...
Peloton has announced that it will exit all owned manufacturing operations, cease making its own products and instead expand its ...
Mindbody and Class Pass have released their 2022 Mid-Year Wellness Trends Report which reveals their predictions following two years of ...
Speedflex has introduced at-home workout machine Speedflex Blade. The product was launched with the support of former footballers Alan Shearer ...
Brawn has launched InGym, a connected strength-training visual display solution for the free weights lifting community. The technology was recently ...
Music service provider Rehegoo (pronounced Reh-air-go) has launched a streaming service for health clubs, gyms, studios, spas and other businesses ...
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