Beachbody switches to affiliate model, reduces workforce by 33% From Investing.com

EL SEGUNDO, Calif. – The Beachbody Company, Inc. (NYSE: BODI), known for its fitness and nutrition products, has announced a strategic shift in its business model, moving away from multi-level marketing (MLM) toward a singles Level marketing. The Level partner program is scheduled to launch on November 1, 2024. This transition is part of the company's broader restructuring plan aimed at reducing costs and streamlining operations.

The move from MLM to an affiliate program should make the sales process more efficient and rewarding for sellers, said Executive Chairman Mark Goldston. Goldston emphasized that this change is a response to current market dynamics and consumer preferences that find the MLM model outdated. The company expects these changes to significantly improve its break-even point and reduce annual revenue from less than $430 million to less than $225 million.

CEO and co-founder Carl Daikeler emphasized the company's history of evolving according to market conditions and expressed confidence that the new affiliate model would revitalize their network by simplifying the sales process. This shift is also intended to help the company's partners and customers achieve better health and fitness results without having to take on the complexities of team leadership.

Consistent with the restructuring, Beachbody will centralize its business around the e-commerce platform BODi.com, eliminate network marketing support functions and reduce its workforce by approximately 33 percent. According to Daikeler, these savings are expected to save $54 million annually and represent a necessary step in aligning with the company's new strategic direction.

The company reiterated its financial guidance for the third quarter ending September 30, 2024, with expected revenue between $97 million and $107 million and an expected net loss of $9 million to $13 million, excluding additional restructuring costs.

Beachbody, originally known as Beachbody, has been a household name in the fitness industry for 26 years, offering programs like P90X and INSANITY, as well as nutritional supplements like Shakeology. The company has served over 30 million customers to date.

This announcement is based on a press release and contains forward-looking statements that are subject to risks and uncertainties that could cause actual results to differ materially. Beachbody's SEC filings, including its Form 10-K filed on March 11, 2024, describe these risks and uncertainties in detail.

In other recent news, The Beachbody Company has reported significant developments. The fitness and nutrition company has entered into a strategic partnership with health payments provider Truemed, allowing eligible BODi customers to use their Health Savings Account (HSA) or Flexible Spending Account (FSA) balance to purchase nutritional supplements. The company beat the midpoint of its second-quarter revenue forecast, with Singular Research adjusting its price target on Beachbody shares to $15.50 and maintaining its Buy Venture rating.

Beachbody also announced changes to its leadership team: Marc Suidan is stepping down as chief financial officer and Brad Ramberg is taking over as interim CFO. Ramberg was granted $100,000 in restricted stock units, which are scheduled to fully vest in 2025. Additionally, Beachbody introduced a new workout program, BODi LAVA, available for a one-time payment of $59.95.

Analysts at Canaccord Genuity initiated coverage of Beachbody with a Buy rating and a $13.00 price target, highlighting the company's transformation into a modern health and wellness company. These are some of the recent developments at Beachbody.

Investing Pro Insights

As Beachbody (NYSE: BODI) makes its strategic shift from multi-level marketing to an affiliate program, InvestingPro's data provides additional context on the company's financial health and market performance.

According to InvestingPro, Beachbody's revenue for the last twelve months (as of Q2 2024) was $477.49 million, with a worrying decline in revenue growth of -19.61% over the same period. This decline is consistent with the company's decision to restructure and streamline operations mentioned in the article. Given these numbers, the move to reduce the sales break-even point to less than $225 million seems crucial.

Despite the challenges, InvestingPro Tips highlights that Beachbody maintains impressive gross profit margins, with data showing a trailing twelve month gross profit margin of 64.79% as of Q2 2024. This margin strength could potentially support the company in the transition phase.

However, another InvestingPro tip suggests that analysts expect a decline in sales for the current year, confirming the company's own forecast and the need for strategic changes. The stock's performance was also worrisome, with InvestingPro's data showing a one-year total price return of -61.02%, according to the most recent data available.

For investors seeking more comprehensive analysis, InvestingPro offers 15 additional Beachbody tips that provide a deeper understanding of the company's financial health and market position during this crucial transition.

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